Brazil’s Big Drop in Activity Points to Bite From Sky-High Rates

Brazil’s economic activity dropped far more than expected in May, a signal that sky-high interest rates are starting to weigh on Latin America’s biggest economy.

The central bank’s economic activity index, a proxy for gross domestic product, fell 0.74% from April, below all forecasts in a Bloomberg survey of analysts that had a median estimate of 0.02 drop. From a year prior, the index advanced 3.16%, according to a report published on Monday.

Central bankers led by Gabriel Galipolo lifted the benchmark Selic to a nearly two-decade high of 15% in June and indicated they would pause a months-long ...