Halister News

(Bloomberg) -- BCB keeping to a cautious message, as well as uncertainties related to a new U.S. government, prevent Brazilian market from embracing bets on 50bps rate cut at next week’s meeting, analysts say.

• While BCB communication drives the market for a 25bps cut now, the output gap may lead BCB to accelerate the pace in 2017, Solange Srour, chief-economist at ARX Investimentos, says in a phone interview
• Reforms are important for long-term economic outlook; in shorter term, the rate cut is a better tool, Paulo Gala, strategist at Fator Corretora, says
  • Amid current high unemployment, deep recession, Brazil real interest rate is ’’too high’’
• In near term, the “Trump risk” will lead to a 25bps cut, Sergio Vale, economist at MP Associados, says
  • BCB may speed up pace of rate cuts after approval of spending cap by Senate; if pension reform passes as expected, the Selic may drop toward 10%