HALISTER1: Brazil CPI Report Increases Odds of Cut in Target to 4.25%: ABC

Brazil CPI Report Increases Odds of Cut in Target to 4.25%: ABC

(Bloomberg) -- Report surprised with figures lower than expected by market, especially for 2019, due in part to updated forecast model, which now includes climate issues, said Luis Otavio Leal, Banco ABC’s chief economist, in a telephone interview.
  • Main message is the probability of changing the inflation target to 4.25%
  • Interest rate should remain at 8.5% at the end of the cycle because it converges with the target reduction
  • Regarding the speed of rate cuts, the report reinforced Brazil Central Bank’s last meeting minutes, which signaled that it’s likely to be a slow down in June
    • Despite the disinflationary surprises that we had between the minutes and the inflation report, a deceleration would be appropriate
  • NOTE: Brazil Central Bank Says Uncertainty Weighs on Economy and Rates
Original Story: Banco ABC: RTI aumenta chance de corte da meta inflação p/ 4,25% To contact the translator on this story: Danielle Chaves in Sao Paulo at djelmayer@bloomberg.net Reporter on the original story: Ana Carolina Siedschlag in São Paulo at asiedschlag@bloomberg.net Editors responsible for the original story: Daniela Milanese at dmilanese@bloomberg.net Patricia Xavier

Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
BCBR20 BZ (Banco Central do Brasil)

People
Luis Leal (Banco ABC Brasil SA)

Topics
Emerging Mkts News, Analysis

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