Halister News

(Bloomberg) -- Even after removing the message that there’s no room for rate cuts, BCB still has a relatively cautious stance, Carlos Kawall, chief economist at Banco Safra and former Treasury Secretary, says in a phone interview.

• 1st Selic rate move still more likely for Nov. 30 BCB decision than the next one on Oct. 19
• Instead of saying they “don’t see conditions” for cuts, BCB message now is that there’s “room depending on some conditions,” Kawall Says
• The main condition among the three cited by BCB for cutting rates is progress on the fiscal agenda; the other two are food and services slowdown
  • While inflation may continue slowing, BCB has highlighted the resilience of prices
  • Fiscal measures such as a spending cap and overhaul of social security are unlikely to be approved in near term
  • Investors may await some sign of reform momentum before betting further on Brazil markets; “the spending cap may be a trigger for optimism should Congress approve a cap without loopholes”
• Greater optimism about Brazil’s market also depends on a

continued low-rate, benign scenario abroad, Kawall says

• NOTE: DI rates drop as BCB statement shift was seen by investors as a door open for cuts this year