PREVIEW: BCB Inflation Report May Show Room for Bigger Rate Cuts
(Bloomberg) -- (Translated by Google and reviewed by Bloomberg editors.)
- Market awaits BCB inflation report with majority bets on accelerating the Selic cut from 0.75 ppt to 1 ppt. Even more aggressive cut of 1.25 ppt is not completely discarded, amid expectations with the BC projection for inflation in 2018 - which became the focus of monetary policy - and the reform scenario, which influences the rate structural
- Median IPCA for 2018 is not changing in Focus research, but average has been falling for more than a month, notes Solange Srour , chief economist at ARX Investimentos, in a telephone interview
- NOTE: While the median for inflation is 4.5%, the average for the IPCA in 2018 has been falling and is below the target since February 6; In the last survey, was at 4.38%
- A decline in the median of 2018 would not necessarily be the password to accelerate the Selic cut beyond 1 ppt; There needs to be a combination of factors, not just Focus, says Solange
- Until next Copom’s decision “we will have IPCA, industrial production and Social Security report in the commission”
- NOTE: BC’s inflation report will be released on Thursday, starting at 8am, half an hour earlier than in previous releases
- Market can test the hypothesis of reducing the Selic rate above 1 ppt depending on inflation report projections, said Gustavo Rangel , ING economist for Latin America in NY
- ING expects cut of 1 ppt at the next Copom, on April 12
- Recovery of the economy, still incipient, should come from the cut of interest by the BC
- Meat crisis looks disinflationary and may help further reduce Selic
- Inflation report should signal stronger Selic drop in April, says Patrícia Pereira , fixed income manager of Mongeral Aegon Investimentos
- Goldman Sachs, in a report signed by senior economist Alberto Ramos , says that inflation report should help consolidate the growing expectation that Copom will accelerate the magnitude of the cut to 100 bps for at least the next couple of meetings
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Alberto Ramos (Goldman Sachs Group Inc/The)
Gustavo Rangel (ING Groep NV)
Patricia Pereira (Mongeral Aegon Investimentos LTDA)
Solange Srour (Arx Investimentos)
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