Brazil: Another cut expected in next policy meeting on January 11 - BBH

Research Team at BBH, notes that the Brazil central bank released minutes from last week’s meeting and it showed that the COPOM was cautious and cut rates 25 bp to 13.75% then, as expected. 

Key Quotes

“The bank noted that risks to the recovery could allow for faster rate cuts, adding that disinflation may intensify if the economy remains weak.  It noted that the 2017 and 2018 outlook for inflation has improved.  November IPCA inflation will be reported Friday, which is expected to rise 7.09% y/y vs. 7.87% in October.  The weaker real may limit the fall in inflation going forward, and so we think COPOM will remain cautious.  Next policy meeting is January 11, and another cut is expected.  Whether its 25 or 50 bp will depend on both internal and external factors.”