Halister News

(Bloomberg) -- BRL may close 2016 at 3.90/USD vs 3.9608 in 2015, helping to ease inflation and opening room for BCB to cut rates, Cristiano Oliveira, chief-economist at Banco Fibra says in a phone interview.

• Slight rise in forecast compares to 33% plunge in 2015, when FX move helped to pressure inflation rise of over 10% y/y
• Current account shrinking deficit, broad weakening trend for USD and local high rates behind improving outlook for BRL
• The “political scenario is only a catalyst for real gains”
• Output gap amid deep recession also may contribute to slow inflation
  • “BCB does not look only at inflation, but also activity”
  • BCB policy from 2H is likely to focus on 2017 inflation, which may be closer to the target; Oliveira forecasts 5.00/5.50% CPI next year
  • BCB may start cutting in July; Selic to close 2016 at 11.75%/12.25% vs current 14.25%