Itaú BBA - Copom starts the easing cycle

Brazil Scenario Review

< Volver

Copom starts the easing cycle

agosto 9, 2019

The BCB cut rates by 50 bps in July, and in our view signaled another cut of the same magnitude in September.


For the version with all charts and tables, please open the attached pdf file

 

• We maintained our GDP growth forecasts at 0.8% for 2019 and 1.7% for 2020.

• The pension reform bill was approved in the Lower House and will move on to the Senate, where the process will likely be completed by early October. No additional changes are expected in the approved version, generating BRL 865 billion in savings over 10 years. Our estimates for the primary budget deficit are 0.9% of GDP for 2019 and 1.2% of GDP for 2020.

• Our year-end exchange rate forecast remains at BRL 3.80 per USD in 2019. As the global environment becomes more unfavorable, we expect depreciation towards 4.00 in 2020.

• We maintained our inflation forecasts at 3.6% for both this year and next.

• Monetary policy: the BCB cut rates by 50 bps in July, and in our view signaled another cut of the same magnitude in September. We still expect the Selic to reach 5.00% p.a. by year-end. 


 

For the version with all charts and tables, please open the attached pdf file



< Volver