Brazil pulled a bond auction and intervened in the currency market to calm investors rattled by a central bank that cut rates while warning on inflation.
Key Facts
—The trigger. Brazil’s central bank cut rates on June 17 while warning sharply that inflation was rising.
—The confusion. Investors read the mixed message as contradictory and demanded higher returns to lend to the government.
—The retreat. On June 22 the Treasury cancelled a planned auction of inflation-linked bonds.
—The backstop. The central bank sold dollars in the spot market to steady the currency.
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