HALISTER1: Brazil Market Optimism Dependent on Reforms, Inflation: Analysts

Brazil Market Optimism Dependent on Reforms, Inflation: Analysts

(Bloomberg) -- Optimism about Brazil’s FX and swap markets is reliant on the approval of economic reforms and inflation slowing down, aside from external factors, analysts say.
  • Reforms are important to boost market confidence on debt solvency and also to open room for BCB to cut rates, Roberto Padovani, economist at Banco Votorantim, says in a phone interview
    • While bets on growth recovery near a consensus for 2017, doubts have arisen over the pace as country’s credit hardship risks limiting improving confidence
  • “Brazil’s economy is edging toward recovery, but high inflation remains an impediment to stronger growth,” Bill Adams, senior international economist at PNC Finl Services Group, wrote in a note
    • Inflation erodes consumer spending power and prevents BCB from cutting rates
    • While local factors are relevant, Brazil assets such as BRL became more dependent on external scenario after 1st-half recovery, when they caught up with other EM markets previous performance, Padovani says
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Roberto Padovani (Banco Votorantim SA)
Bill Adams (PNC Financial Services Group Inc/The)

To de-activate this alert, click here

UUID: 7947283