All 32 analysts polled by Reuters believe the Brazil Copom will maintain its benchmark Selic rate at 14.25 percent to anchor inflation expectations despite a recent slowdown in price increases. This could be the last decision of its current board ahead of a possible change of government in the coming weeks.
Since the last meeting of the Brazil Copom on March 2nd macro and market developments have been broadly favorable for the Brazil’s medium-term inflation outlook. Brazil's inflation rate slowed sharply in March to below 10 percent a year, the lowest in nine months, but still well above the 4.5 percent center of the official target range.
“We currently expect no rate cuts in 2016, followed by a 100bp rate cut in 2017 when the BCB sees inflation converging to its target range (between 3% and 6%)”, said Societe Generale.
Sacha Tihanyi, Senior EM Strategist at TD Securities, expects the BCB to hold on rates, but with a slightly less hawkish tilt as we see reason for the two dissents for a 50bp rate hike to be removed.
