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Banco Central do Brasil (BCB) cuts the Selic rate by 50bps, accommodating the median expectation of a highly divided set of market policy estimates, economists at TD Securities brief. USD/BRL trades at 5.106.

Key quotes

“The BCB noted inflation expectations sit below target at 3.1%, 3.65% and 3.5% for 2020, 2021, and 2022.”

“In the decision to lower the Selic rate by 50bps, the BCB cited ‘a higher than usual variance in the balance of risks’.”

“We consider our forecast for the BCB to be on hold past the March meeting to be under consideration for revision, and maintain our weaker BRL call for 5.50.”