Brazil's July activity falls more than expected ahead of rate decision

SAO PAULO, Sept ‌16 (Reuters) - Economic ​activity ​in Brazil fell by a seasonally adjusted 0.2% in July from the previous month, a ‌central bank index showed on Wednesday, compared with ⁠expectations for a 0.1% contraction in a Reuters poll of economists.

• ‌Latin America's largest economy ‌has been cooling as elevated borrowing costs weigh on activity.

• July marked the second consecutive month ​of contraction following a revised 0.9% drop in June.

• Brazil's central bank has lowered its benchmark ⁠interest rate by 25 basis points at each of its last four ​meetings, bringing it to 14%, but the country's real rates remain among the highest in ​the world.

• Policymakers at the ‌bank will announce their next rate decision later on Wednesday, with economists in a ⁠Reuters poll forecasting another 25 bp cut to 13.75%.

• "The growth data increasingly argue for lower rates; the inflation ⁠backdrop argues for getting there gradually," said Andres Abadia, Pantheon Macroeconomics' ​chief Latin America economist.

• The central bank's IBC-Br index, seen as a proxy for gross domestic product, showed that the ‌agricultural sector was the main drag in July, posting a 1.2% decline.

• Industry fell ‌0.4%, while services - the backbone of Brazil's economy - ⁠were flat.

• On a ‌year-on-year basis, the ​IBC-Br index was up 1.1% in July.

(Reporting by Gabriel Araujo, Editing by Louise Heavens, Kirsten ‌Donovan)

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