Itau Sounds Brazil Slowdown Alarm as 12% Rates Dismissed

Latin America’s largest bank is clashing with traders and economists by predicting the economic slowdown in Brazil will prevent its central bank from raising interest rates through next year.

Itau Unibanco Holding SA said July 11 it no longer anticipates any rate increases as data from lower business confidence to a weaker labor market suggest the region’s largest economy shrank last quarter for the first time in almost a year. Swaps trading and results from a weekly central bank survey of 100 analysts show that policy makers will boost rates one percentage point to 12 percent by the end of 2015.