Brazil's services activity index was flat in June from the previous month, data from statistics agency IBGE showed on the 12th, beating the 0.2% decline expected by economists polled by Reuters. Analysts at JPMorgan said the data were more resilient than their traditional model suggested, reducing downside risks to growth and supporting their forecast that second-quarter gross domestic product expanded at an annualized pace of around 2%. Activity fell in four of the five sectors surveyed in June, but that was offset by growth in information and communication services. The index rose 2% from a year earlier, also above the 1.4% increase economists had expected. The central bank this month cut its benchmark interest rate by 25 basis points for a fourth consecutive meeting to 14%, while leaving its future policy path open.
Resilient services data reduces downside risks to growth, supporting the central bank's cautious easing path, which may temper further rate cuts, supporting yields.
