BCB PREVIEW: Brazil Minutes Seen Flagging Selic Rate on Hold
(Bloomberg) -- Despite increasing market bets on a cut, central bank minutes from the March 2 policy meeting should continue to signal that the Selic rate will be left unchanged, according to analysts.
- Bank is likely to keep benchmark rates for the short term to assure a better result in the fight against inflation, Cristiano Oliveira, chief-economist at Banco Fibra, says
- “BCB statement was similar to that of prior meeting. The minutes will also be similar”
- Bellow-est. CPI released today isn’t enough for BCB to change its signal for a cut in the short term; local and external uncertainties justify stable rates
- Room for cuts may appear in 2H, when the policy may start focusing on 2017, where CPI forecasts are closer to 4.5% target than those of 2016; recovering BRL also may help BCB decide
- NOTE: DI Swap rates dropped on CPI and after Valor reported that some BCB directors have discussed rates cuts; DI curve prices in Selic rate cut, with bigger odds of easing in the 2nd half
- Basic scenario is still for rates to remain stable and BCB may keep a cautious stance in an effort to bring inflation under control because its target is still ’’challenging,’’ Leonardo Sapienza, chief-economist of Banco Votorantim, says
- Bradesco chief-economist Octavio de Barros said BCB may cut the rate cut sooner than forecast if inflation is slightly below seasonal level in coming months
- NOTE: BCB releases minutes on Thursday, 8:30am local time; Copom last week kept Selic at 14.25% with two dissenting directors voting for a 50bps hike
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Cristiano Oliveira (Banco Fibra SA)
Leonardo Sapienza (Banco Votorantim SA)
Octavio De Barros (Banco Bradesco SA)
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