Halister News

(Bloomberg) -- “We view positively the clarity and candid nature of the central bank’s guidance and for adopting what we view as a cautious and prudent stance in the face of rising uncertainty”, says Alberto Ramos, Goldman Sachs’ chief economist for Latin America, in a report after Copom’s decision to cut benchmark Selic rate by 100bps to 10.25%.

• “The policy statement and the forward guidance turned more hawkish and conservative: the easing cycle will continue, but given rising uncertainty likely at a lower pace”, says Ramos about the statement that followed last night decision
  • “Overall, the bank is still comfortable with the outlook for inflation but is particularly concerned about the impact of the recent increase in policy and political uncertainty on the outlook for reforms, the economy, and inflation”
  • “Furthermore, heightened uncertainty makes the central bank less comfortable about the accuracy/precision of its conditional forecasts. In this case, the central bank should err on the side of being conservative”
• “From this conservative standpoint, we believe it will be a lot easier and from a credibility standpoint safer to eventfully guide the market to expect a larger cut than the 75bp hinted today for the July meeting, were the current level of uncertainty to dissipate quickly and the outlook for reforms to improve”

To contact the reporters on this story: Leonardo Lara in Sao Paulo at llara1@bloomberg.net; Vinícius Andrade in São Paulo at vandrade3@bloomberg.net To contact the editors responsible for this story: Daniela Milanese at dmilanese@bloomberg.net Danielle Chaves