BCB PREVIEW: 25bp Cut Likely After Trump; Hint of 50bp Possible
Source: BFW (Bloomberg First Word)
People
Alberto Ramos (Goldman Sachs Group Inc/The)
Cristiano Oliveira (Banco Fibra SA)
Newton Rosa (Sul America Cia Nacional de Seguros)
Olavo Souza (Mirae Asset Securities Brazil Exchange Broker Securities Ltd)
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UUID: 7947283
(Bloomberg) -- Brazil traders and economists mostly expect BCB to keep the current pace of easing as Trump-led volatility on BRL may prevent the bank of more aggressively acting. Potential of change in statement is considered.
Alert: HALISTER1- Traders in the DI markets project 30.08bps cut for the Weds. BCB decision, closer to 25bps than 50bps cut; in a Bloomberg survey, 27 economists forecast Selic cutting by 25bps to 13.75% and 6 estimate Selic will drop to 13.50%
- U.S. election outcome added uncertainty to the global macro backdrop facing many EM economies, Alberto Ramos, senior- economist at Goldman Sachs, wrote in a report
- “Beyond potential trade protectionist policies, the expected policy mix by the incoming administration was perceived to lead to higher dollar yields and a stronger USD in global markets”
- Besides cutting Selic by 25bp, BCB statement may recognize that external scenario became more “cloudy” after election in U.S., Olavo Souza, economist at Mirae Corretora, says in a phone interview
- Markets may stay volatile through January, until the Trump government plans become clear
- While the recent price indexes have improved, the implicit inflation -- which is at 6.7% for one year -- stays above the BCB targets
- Inflation’s recent signs of slowdown, weak activity and progress seen in fiscal agenda could lead BCB to accelerate pace to 50bps; however, after post-Trump risk aversion wave pushing USD to 3.40/BRL versus previous ~3.20, BCB likely to keep the 25bps cut, Newton Rosa, chief-economist at SulAmerica Investimentos says
- BCB may cut 25bps while discussing the possibility of a 50bps reduction given the weakness of the economy, Banco Fibra economist Cristiano Oliveira says
- BCB may choose to tweak its language to suggest that the possibility of faster easing is starting to blink on the radar screen for coming policy meetings, BNP writes in a report
Source: BFW (Bloomberg First Word)
People
Alberto Ramos (Goldman Sachs Group Inc/The)
Cristiano Oliveira (Banco Fibra SA)
Newton Rosa (Sul America Cia Nacional de Seguros)
Olavo Souza (Mirae Asset Securities Brazil Exchange Broker Securities Ltd)
To de-activate this alert, click here
UUID: 7947283