HALISTER1: BRL Gains May Help BCB Cut Selic by Up to 100bps in Feb.: Mirae

BRL Gains May Help BCB Cut Selic by Up to 100bps in Feb.: Mirae

(Bloomberg) -- BCB may allow BRL to extend gains, opening room for rate cut larger than 75bps in the next meeting, Olavo Souza, FI trader at Mirae says in a phone interview.
  • Swaps rollover comeback shows BCB intention to change the level of USD/BRL, he says
    • Lower USD may avoid fuel price rise in Brazil even if oil prices keeps increasing
    • BCB sees lower level for activity and inflation compared to market projections
    • CPI may drop to near zero in the coming months
    • Selic could be cut to below 10% as soon as in 1H17
    • With bigger cuts, BCB could help economy resume growth in the 2H17
  • NOTE: BCB to Cut Rate by 75bps Per Meeting Until July: Barclays
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Olavo Souza (Mirae Asset Securities Brazil Exchange Broker Securities Ltd)

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