Halister News

(Bloomberg) -- Brazil’s central bank may only cut its rate by 25bps, rather than at a faster pace as previously expected, amid the volatility caused by uncertainties surrounding Trump government, Luciano Rostagno, chief strategist at Banco Mizuho do Brasil, says in a phone interview.

• BCB would likely only stop cutting in a scenario of more market stress with USD/BRL around 4.00
• Recent signs of slowing inflation allows BCB to keep cutting Selic rate at a moderate pace
• Central bank may also continue acting with FX swaps to stem BRL volatility; reserves sales so far haven’t been needed
• BCB auctions today are supportive for BRL, but unlikely to have a prolonged effect
  • “The market reflects the uncertainty over the policies to be implemented in the US”
  • Trump hints at fiscal expansionary policy, would lead Fed to hike more than previously expected, impacting EM currencies