Brazil Extending World’s Biggest Rate Rise to Regain Credibility

Brazil’s central bank probably will raise the benchmark interest rate for a sixth straight meeting in an effort to convince investors that policy makers are serious about slowing inflation back to its target.

Policy makers led by central bank President Alexandre Tombini will lift the Selic rate to 10 percent from 9.50 percent today, according to 50 of 52 economists surveyed by Bloomberg. Two analysts expect a 0.25 percentage-point boost. The bank is scheduled to announce its decision after 6:00 p.m. local time.

Before embarking on the world’s biggest interest rate increase this year, policy makers slashed borrowing costs to a record even as consumer price increases exceeded the 4.5 percent goal. The past decisions coupled with higher public spending led investors to speculate the government had abandoned its inflation target, hurting the central bank’s credibility, former bank President Carlos Langoni said. Now, the effort to tame above-target inflation is also being undercut by a weaker currency and a widening budget gap. “The central bank is trying to make up for past mistakes,” Langoni, who is head of the World Economic Center at Fundacao Getulio Vargas, said in an interview at his office in Rio de Janeiro. “Since they lost credibility, they probably have to overshoot the interest rate.”

Analysts forecast Tombini will fail to meet his pledge to slow inflation in 2014 from 2013 as the biggest decline amid major currencies in the past six months reignites price increases. They predict inflation will accelerate to 5.92 percent in 2014 from 5.82 percent this year, according to a central bank survey published Nov. 25.

Counter-trend action in Asia today

Once again on Tuesday, it was Australia and Japan providing the news flow and biggest moves during the Asian session.

Yen sold out – catches bid despite dovish sentiment in BOJ Minutes

The release of the Bank of Japan’s monthly Policy Meeting Minutes Tuesday probably should have meant more downside for the Japanese Yen, but when seemingly everyone in the world is already short or waiting for a rally to get short, there are no sellers to be found and a bounce can occur. That apparently is what may have been the case today.

RBA’s Lowe comments give AUD a brief lift

The Aussie Dollar also caught a little buying interest Monday despite being universally declared in a bear market. In an effort to assign causality to every move that occurs these days, the wires were giving credit for Tuesday’s Aussie upside to comments made by the Reserve Bank of Australia’s Phillip Lowe.

Prism Cement gains; Ashwani Gujral suggests Rs 79 as target

Prism Cement was among major gainers in today’s session. At 11.30am, the stock was trading 6% higher compared to previous close.

The stock has touched an intraday high of Rs 54.25 on NSE. The trading volumes are high as well. On NSE, during the first hour of trading, 2.1 million shares changed hands while the volume on BSE was 1.4 million shares.

The stock is trading near its 52-week high of Rs 60.

Indian Stock markets trading higher, BSE Sensex up by 160 points at 11.03 AM IST

In a surprise move, Indian Stock markets have gone opposite to the global weakness. The stock market started inching up during the morning session. At 11.03, BSE Sensex was up by 160 points at 14948. NSE Nifty was up by 51 points.

Among major gainers on NSE were, ONGC (up by 1.6%), Hindalco (up by 3.2% at Rs 104), Siemens, M&M, DLF, Larsen & Toubro, Jindal Steel and Suzlon Energy.

Among major gainers on BSE were, Jaiprakash Associates, SBI, Maruti Suzuki, Tata Steel, ICICI Bank and HDFC Bank.