Rabobank analysts suggest that their impression is that the tone of the recently released Copom minutes cools down a bit the expectations of immediate rate cut (i.e. for the July meeting), but it does keep door open for policy easing at some point.
“We also believe that the BCB once again strengthened the message that rate cuts will only be on the cards after “concrete progress” in the agenda of macro reforms, which we read as first-round approval of an effective pension reform at the House’s floor.”
“We look for three rate cuts of 50bp from September onwards, taking the Selic rate to 5% by end-2019. Our scenario also projects BCB on hold all across 2020, if reforms pass as expected.”