Brazil: BCB to cut by a further 25bp today – TDS

Analysts at TDS expect the BCB to cut by a further 25bp, and to signal an end to its long easing cycle at today's meeting.

Key Quotes

“There is some risk that still high unemployment, low current inflation and low future expected inflation will provide the BCB with comfort in easing further, however we feel that concern over the lack of substantial structural fiscal reform will instill a degree of hesitancy in over-easing. The market is pricing-in a hiking cycle beginning in the late summer or early fall, however we feel that the BCB (so long as it cuts only 25bps more) will remain on hold for the duration of the year and only begin hiking in 2019.”