CORRECT: BZ CPI Goal May Postpone Rate Cut to 2017: AZ Quest
(Bloomberg) -- (Corrects year in headline) BCB’s first rate cut could only come in first half of 2017 if the National Monetary Council in a meeting later today lowers the CPI target for 2018, Andre Muller, economist at AZ Quest Investimento, says in a phone interview.
- “If this change happens, the Selic rate will stay unchanged for a longer period”
- NOTE: Valor, one of the nation’s main newspapers, reported 2018 CPI goal may be cut to between 4%-4.25% from 4.5% in 2017
- Meirelles, Goldfajn gather at Monetary Council meeting starting at 3pm local time
- BCB’s latest inflation report showed CPI forecast at 4.2% in 2Q18 vs current 4.5% annual target in a scenario that implies rate held at 14.25%; in alternative scenario with a rate cuts, CPI for 2Q18 is estimated at 5.5%
- NOTE: DI market traders scrapped bets on rate cuts in July and August after BCB this week reinforced commitment to bringing inflation in line with target
- Eventual longer period of high rates in Brazil could lead to a stronger BRL amid lower external rates, Muller says
- Reports on fiscal deficit from new government aren’t concerning markets since acting President Temer has stuck to his plans for structural reforms, such as spending cap and social security overhaul
- Fiscal reforms, along with a more hawkish central bank, could mean higher rates in the short term and both lower inflation and rates in the long term, leading the country’s growth to recover
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Andre Muller (Quest Investimentos Ltda)
Henrique Meirelles (Brazil Secretaria do Tesouro National)
Ilan Goldfajn (Banco Central do Brasil)
Michel Temer (Federative Republic of Brazil)
To de-activate this alert, click
hereUUID: 7947283