Brazil: BCB sounds somewhat more dovish – Deutsche Bank
|In Brazil, BCB President Ilan Goldfajn stressed that monetary easing will continue despite the latest political developments, notes the analysis team at Deutsche Bank.
Key Quotes
“According to Goldfajn, “there is no direct and mechanical relationship between the increase of uncertainty and monetary policy” and although the political uncertainty makes it more difficult to accelerate the decline in the neutral real interest rate, “progress on fiscal reform has been favorable and its continuity will be relevant for future economic performance.” Moreover, “inflation expectations are anchored, inflation forecasts are close to the target for 2018 and slightly below the target for 2017, and there is high degree of idleness in the economy.” Consequently, “the scenario prescribes the continuity of monetary easing, already taking into account the current risks.”
“We currently expect the BCB to cut the SELIC rate by 75bps at the next monetary policy meeting in July, but the latest comments made by the BCB suggest that another 100bp rate cut cannot be ruled out. The BCB quarterly Inflation Report, which is scheduled to be published on Thursday, could provide more information and help market participants calibrate their expectations for the easing cycle.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.