Halister News

(Bloomberg) -- Brazil central bank is expected to cut Selic rate by 100bps on July 26, taking key rate to the single-digits for the first time since October 2013 and at the lowest level since August of that year. 

• Analysts expect BCB to drop idea of change in easing pace in July meeting amid increasingly benign inflation conditions and FX resilience to the political crisis
• At the same time, analysts see BCB slowing down the easing pace at subsequent meetings
  • Even at a slower pace, there’s an increasing number of institutions cutting estimate for end-of-cycle Selic rate, with chances of it reaching 7%
• Inflation scenario, latest data "strongly indicate" 100bps cut in Selic rate, UBS Chief Economist for Brazil Tony Volpon says
• BCB changed the tone after its May statement and reduced the commitment to slower easing pace, while June scenario reinforce bets on 100bps cut, Nomura Strategist Joao Pedro Ribeiro says
• Trends that were occurring before the crisis continued, with low inflation, activity stabilizing at the margin, not indicating very rapid recovery, benign international scenario and inflation surprises to the downside, Banco Safra Chief Economist Carlos Kawall says
• It is prudent to continue to signal a step reduction; if there is room at next meeting, BCB can cut yet another 100bps, BofAML Chief Economist and Strategist for Brazil David Beker says
• Mauricio Oreng, Rabobank Brazil strategist, still expects a 75bps cut in July, amid uncertainty about pension reform, "which may affect how much neutral interest will fall and how sustainable the drop in interest and inflation will be"
• NOTE: Access TOPLive to follow coverage of Brazil rate decision and analysts comments on July 26 (in Portuguese). To create an alert, click here.

Original Story: Prévia: Aposta converge p/-1pp e sinal de redução ritmo no Copom To contact the translator on this story: Giulia Camillo in Sao Paulo at gcamillo@bloomberg.net Reporters on the original story: Vinícius Andrade in São Paulo at vandrade3@bloomberg.net; Marisa Castellani in Sao Paulo at mcastellani7@bloomberg.net Editor responsible for the original story: Daniela Milanese at dmilanese@bloomberg.net