BCB Preview: Going 50 or 75? – Rabobank

Sandeep Kanihama FXStreet Contributor

Mauricio Oreng, Senior Brazil Strategist at Rabobank, suggests that the markets will see a live Copom policy meeting on Wednesday (January 11) and while they stick to their call for a 50-bp Selic rate cut to 13.25%, part of the market projects a bolder move (75bps).

Key Quotes

“We see this is as a close call.”

“With analysts/market inclined towards a 50-bp move, we believe the BCB will chose to implement stimulus gradually. The idea is to minimize risks for inflation expectations, which have only recently converged towards 4.5% (after years strolling above the mid-target).”

“Both the decision and communication will be important to assess the next steps. For now, we keep our baseline scenario of Selic cuts to 11% this year and 9% next year, with risks skewed towards faster moves than we have pencilled in.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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