(Bloomberg) -- Brazil’s central bank isn’t yet considering interest rate increases, chief Roberto Campos Neto said, even as traders bet on hikes after policymakers halted their yearlong easing cycle last week.

“It’s not our base case scenario,” Campos Neto told reporters in Sao Paulo on Thursday, after the bank revised its 2024 growth estimates upward. “We are staying vigilant, but prefer not to give guidance” on future rate moves, he added. 

The bank’s board voted unanimously last week to hold the benchmark Selic at 10.5%, a move that followed a split decision to slow its easing pace in May. The divide generated concerns about the bank’s tolerance of inflation once President Luiz Inacio Lula da Silva has appointed a new governor and a majority of the board’s members. Those worries, along with uncertainties about fiscal policy, led traders to price in rate hikes for later this year.

A rise in Brazilian swap rates accelerated amid Campos Neto’s remarks, increasing as much as 17 basis points on the long-end of the curve in Thursday trading. 

Campos Neto also spoke about the struggles facing the Brazilian real, which fell to its lowest level in two and a half years amid investor skepticism of Lula’s pledges to shore up the country’s public accounts.

“There’s short-term noise” impacting currency levels, Campos Neto said, adding that investors see a worsening fiscal outlook despite an improvement in current numbers. Still, the bank intervenes only to correct specific dysfunctions, he said, adding that movement is in line with a higher risk premium for Brazil.

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