Brazil

President Luiz Inacio Lula da Silva cast doubt on the need to meet Brazil’s fiscal targets, saying in an interview with a local TV station that he is “not obligated to set a goal and stick to it” if he decides he “has more important things to do,” Bloomberg News reported. “It’s just a matter of vision,” Lula said in the Tuesday interview with Record TV. “This country has no problem if it is a zero deficit, if it is a 0.1% deficit, if it is a 0.2% deficit. There is no problem for the country.

Brazil’s economy grew slightly less than expected in May though prior figures were revised up, the central bank’s main gauge of activity showed amid signs that borrowing costs will stay high for longer, Bloomberg News reported. The bank’s economic activity index, a proxy for gross domestic product, rose 0.25% from April, below the 0.3% median estimate from analysts in a Bloomberg survey. Still, April’s monthly growth was revised to 0.26% from 0.01% previously, according to data published on Monday. From a year ago, the gauge gained 1.3%, the report added.

Brazil’s annual inflation rate rose less than expected in June, bolstering the central bank after it came under fire from critics for pausing its interest rate cuts to combat simmering price pressures, Bloomberg News reported. Official data released Wednesday showed prices increased 4.23% from a year earlier, below the 4.32% median estimate from analysts in a Bloomberg survey. On the month, inflation stood at 0.21%, under all forecasts.

Brazil’s top decision-maker on currency intervention signaled he wouldn’t pull the trigger on any move to stem this year’s rout in the real without obtaining full support from the central bank board, Bloomberg News reported. Gabriel Galipolo told investors in private meetings this month he would seek consensus from fellow bank directors before taking action in the foreign exchange market, according to four participants of those gatherings.

Brazilian power company Equatorial Energia SA emerged as the sole bidder to buy a key stake in Sabesp, the water utility that’s being privatized by Sao Paulo state in a multibillion-dollar share offering, Bloomberg News reported. Equatorial submitted a proposal by Wednesday’s deadline to buy a 15% stake in Cia. de Saneamento Basico do Estado de Sao Paulo, as the Brazil company is formally known, according to people with knowledge of the matter. A rival bid from a private utility backed by Singapore sovereign wealth fund GIC and Itausa SA, failed to materialize.

Brazil’s mid-month inflation slowed more than expected in early June, just as central bankers signaled they’re in no rush to resume interest rate cuts after pausing their monetary easing cycle last week, Bloomberg News reported. Official data released Wednesday showed prices increased 4.06% from a year earlier, below the 4.11% median estimate from analysts in a Bloomberg survey. Inflation stood at 0.39% on the month. Policymakers led by Roberto Campos Neto interrupted an almost yearlong cycle of rate cuts, holding the benchmark Selic steady at 10.5%.

Brazil’s central bank held its key interest rate in a unanimous vote, fueling a rally in the real as it signaled borrowing costs will be steady for a prolongued period to battle rising inflation estimates, Bloomberg News reported. Policymakers kept the benchmark Selic unchanged at 10.5% late on Wednesday, as expected by nearly all economists in a Bloomberg survey. They paused an easing cycle that had lowered rates by 3.25 percentage points. The Brazilian real gained as much as 0.9% against the dollar on Thursday morning, leading global gains.

Brazilian companies that loaded up on cheap debt are bracing for a new reality: double-digit interest rates for longer than anyone expected, Bloomberg News reported. The Central Bank of Brazil’s easing cycle appears headed for a premature end, with traders expecting it to hold the policy rate at 10.5% when it meets later Wednesday. Borrowing costs will remain above 10% for the foreseeable future, according to pricing in Brazil’s swap curve. That poses a fresh challenge to companies carrying floating-rate debt they took on when rates were around historic lows of 2% during the pandemic.

Brazil's tax authority will soon call foreign crypto exchanges not based in the country to explain their operations and how they cooperate with local service providers, government officials told Reuters on Monday. The tax revenue service is expected to publish this week an ordinance summoning these companies for further information. Unlike exchanges formally established in Brazil, they are not obligated to report transactions conducted on their platforms. "It's an area of concern for us to understand first how they operate here, whether there's any illegality or not.