Brazil: COPOM expected to cut rates by 100 bps - BBH

Analysts at BBH suggest that COPOM is expected to cut rates by 100 bps to 9.25% at its policy meeting today.  

Key Quotes

“IPCA inflation was only 2.78% y/y in mid-July, the lowest since 1999.  This is below both the 4.5% target and the 3.0-6.0% target range, and so further easing is likely.  Markets are pricing in a 75 bp cut to 8.50% at the September 6 meeting followed by a 50 bp cut to 8.0% at the October 25 meeting.  The weekly central bank survey shows end-2017 and end-2018 SELIC expectations at 8.0%.  With inflation running so low, we see downside risks to the SELIC forecasts and potential for a dovish surprise at the December 6 meeting.”