HALISTER1: Brazil’s BCB May Use FX or Hold Rate to Curb Inflation: Infinity

Brazil’s BCB May Use FX or Hold Rate to Curb Inflation: Infinity

(Bloomberg) -- Above-est. inflation in Brazil may be a hurdle for potential monetary easing by the central bank, Jason Vieira, economist at Infinity Asset, says in a e-mailed note.
  • NOTE: May IGP-DI Inflation Index 1.13% m/m; median est. 0.89%, highest est. 1%
  • “In this scenario of additional pressure of prices, the BCB monetary committee work to start the monetary easing suffers another setback”
    • BCB may use FX to alleviate the prices, which could be negative for the adjustment of external accounts
    • If central bank opts to not use FX, BC could leave the rate cut until October
    • NOTE: DI market projects rates cut starting in July
    • Ilan Goldfajn, appointed by acting president Temer to head BCB, is scheduled for a hearing in Senate today
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Ilan Goldfajn (Banco Central do Brasil)
Michel Temer (Federative Republic of Brazil)

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