Brazil: No rate cut until November - TDS

On Wednesday, the Central Bank of Brazil (BCB) will announce its decision on monetary policy. According from TDS expect no change in rates until November, when they see a rate cut.

Key Quotes:

“On Wed, we continue to expect no move from the BCB to cut the SELIC rate until the Nov meeting (the last of the year), at which point we expect a 50bps cut. The market has moved towards our view, and away from a more dovish outlook which had COPOM priced for a bias of a 25bps cut just two months ago.”

“Hawkish messaging from the highly respected new governor has taken the dovish bias out of the market in the near term, so the CB should feel more comfortable cutting when CPI (particularly non-regulated, non-tradable) moves lower in the coming months.”