The Brazilian central bank is set to meet later today for its last monetary policy meeting of 2019. According to a Commerzbank research report, the Brazil Central Bank is expected to further lower its key interest rate by 50 basis points to 4.5 percent.
This was evident in the central bank’s statement of its October meeting. The latest GDP publication and the inflation data for November, both, did not provide any reason for the central bank to change its stance. The central bank is in fact willing to relax its monetary policy in spite of its interventions in the currency market had already been demonstrated in the summer.
“In this respect, the focus at today's meeting will be on the statement in which there could be indications as to whether the cycle has ended with today's rate cut or whether further easing is imminent in the new year”, stated Commerzbank.
After GDP data surprised positively in the third quarter and inflation is expected to pick up again slightly in the months ahead, the interest rates are expected to be unchanged in 2020.
“Should the central bank leave the door open for interest rate cuts, this should weigh on the BRL. However, the trade conflict between China and the US and today's Fed meeting will of course allow external factors to keep the upper hand”, added Commerzbank.
