Brazil's inflation unexpectedly cools, traders lower interest rate cut expectations

On June 10, the annual inflation rate in Brazil fell more than expected in May, breaking a three-month rising trend before central bank officials met to decide whether to continue the aggressive interest rate hike cycle. Official data released on Tuesday showed that consumer prices rose 5.32 percent year-on-year, compared with the survey’s median forecast of 5.39 percent. The monthly inflation rate was 0.26%. The January 2027 interest rate swap contract, a gauge of market expectations for monetary policy, fell more than 11 basis points in early trading after inflation slowed more than expected. Investors have also lowered their expectations for another rate hike at next week’s meeting.