Halister News

(Bloomberg) -- Brazil assets’ recent gains reflect outlook for potential approval of reforms; when those reforms are actually approved, there will be room to rise further on expectations, Santander chief-economist Mauricio Molan says in a phone interview.

• “The investors want something concrete” to increase confidence in new government’s ability to fix the economy
  • Santander forecast 2% GDP growth in 2017, with the country partially recovering from an expected 3.8% decline in 2016
  • Inflation expectations still not enough to allow BCB to cut rates; Molan sees bank starting to ease policy in August
  • “The BCB is likely to demand further improvement in CPI expectations to cut”
• External risks such those represented by U.S. rates, China growth and Brexit also help limit Brazil’s confidence in recovery
• NOTE: Govt wants to vote on impeachment of suspended Pres. Rousseff as soon as possible, as it is seen as necessary for investors’ confidence to improve further, Folha says