HALISTER1: BCB May Keep Hold Stance; BRL Pressured by U.S. Data: Garde

BCB May Keep Hold Stance; BRL Pressured by U.S. Data: Garde

(Bloomberg) -- BCB meeting statement next week is likely to maintain the central bank’s previous message that there’s no room for rate cuts in present conditions, Daniel Weeks, chief economist at Garde Asset Mgmt, said in a phone interview.
  • BCB may wait for the government to address reforms and inflation expectations to decline further before it starts easing monetary policy
    • First cut more likely to happen in November
  • BRL drop reflects above-est. U.S. retail data; as U.S. economy continues showing momentum, Fed may start hikes later this year
    • Strong US data “mutes a little the idea of a weak dollar versus strong EM currencies”
    • Changes “that world we were seeing after Brexit”
    • Current pressure on BRL is unlikely to stop BCB from continuing to act with FX reverse swaps
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Daniel Weeks (Garde Asset Mgmt)

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