FXstreet.com (Barcelona) - Having eased the Selic rate by a total of 400bp to the all-time low of 8.50% in May, the BCB (Banco Central do Brazil) is expected by TD Securities analysts to cut it by further 50bp to 8.00% this week, while the market is already pricing in 100bp of cuts in 4-6 months.
According to the COPOM, a final cut should be made in August, to 7.50%. “Any further cuts would add to the laxity of monetary policy and increase the upside risks for inflation going forward. For this reason, we think the BCB will be constrained in the amount of easing”, wrote the economists, pointing to the weakening pace of economic growth, adverse global environment and subdued inflationary pressures as reasons for the easing.
According to the COPOM, a final cut should be made in August, to 7.50%. “Any further cuts would add to the laxity of monetary policy and increase the upside risks for inflation going forward. For this reason, we think the BCB will be constrained in the amount of easing”, wrote the economists, pointing to the weakening pace of economic growth, adverse global environment and subdued inflationary pressures as reasons for the easing.
