HALISTER1: Brazil CPI Report Trims Market Optimism For Rate Cut: Analysts

Brazil CPI Report Trims Market Optimism For Rate Cut: Analysts

(Bloomberg) -- DI rates are rising, reflecting the BCB inflation report that says it sees no room for cutting rates, analysts say.
  • “The BCB cooled down the market bets on a rate cut”, Pablo Spyer, director at Mirae Asset Wealth Management, says in a phone interview from Sao Paulo
  • BCB raised forecasts for inflation in most terms; only shows low inflation for 2018, a long time away given the many uncertainties ahead, Spyer says
  • Despite deep recession, Brazil inflation shows resilience due to high level of indexation
  • “Political imbroglio” also causing volatility
  • BCB inflation estimates came in worse than market was anticipating, Rodrigo Melo, chief economist at Icatu Vanguarda Administracao de Recursos says
    • Projections show inflation is still above BCB targets; the report fails to reflect any room for cuts in the coming meetings
    • “The scenario for inflation is still uncomfortable”
    • BCB cited a forecast of BRL at 3.70/USD; given this level, CPI does not match the target, Melo says
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Pablo Spyer (Mirae Asset Global Investments)
Rodrigo Melo (Icatu Vanguarda Administracao de Recursos Ltda)

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