Itaú BBA - Copom minutes: Risks limit Selic rate below the 5% level, for now

Macro Brazil

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Copom minutes: Risks limit Selic rate below the 5% level, for now

septiembre 24, 2019

The minutes reinforced the likelihood of a 50-bp cut in October, but limited the indication of even lower interest rates, for now.


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

 

• The Copom minutes reinforce the indication that another 50-bp cut of the Selic rate is likely to occur in its October meeting, as the committee repeated the allusion to a hybrid scenario, with a constant exchange rate at BRL/USD 4.05 and lower interest rates (following market consensus), that yields below-target inflation scenarios, suggesting that this exchange rate level is no impediment for further easing. But the authorities also mentioned that risks of adverse scenarios for risk assets (read: the exchange rate) appear to have intensified, which limits, for now, any indication that the Copom may test even lower levels for the Selic rate. We maintain our call of a 50-bp rate cut in October.


 

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



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