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21 Apr 2015
Further tightening in Brazil? – Scotiabank
FXStreet (Edinburgh) - In the opinion of Eduardo Suarez, Chief FX Strategist at Scotiabank, the Brazilian central bank could hike rates further in the medium term.
Key Quotes
“S&Ps sounded cautiously constructive on Brazil’s ratings, and our sense is that a downgrade (i.e. a loss of investment grade) does not seem to be in the cards for the following couple of years, at least as long as support for Levy’s adjustment plans remains in place”.
“From FinMin Levy we got the expected commitment to meeting the fiscal target, although the FinMin also said it would not be possible to meet the targets without legislative support, and Levy also stressed the government will have to remain vigilant”.
“Regarding yesterday’s releases, the renewed increase in 2015 expected inflation could add one more reason why the central bank may deliver an additional +50bps hike in order to anchor inflation expectations”.
“Inflation expectations once again moved higher in the BCB survey published yesterday. On the margin, this could reinforce expectations of a +50bps hike”.
Key Quotes
“S&Ps sounded cautiously constructive on Brazil’s ratings, and our sense is that a downgrade (i.e. a loss of investment grade) does not seem to be in the cards for the following couple of years, at least as long as support for Levy’s adjustment plans remains in place”.
“From FinMin Levy we got the expected commitment to meeting the fiscal target, although the FinMin also said it would not be possible to meet the targets without legislative support, and Levy also stressed the government will have to remain vigilant”.
“Regarding yesterday’s releases, the renewed increase in 2015 expected inflation could add one more reason why the central bank may deliver an additional +50bps hike in order to anchor inflation expectations”.
“Inflation expectations once again moved higher in the BCB survey published yesterday. On the margin, this could reinforce expectations of a +50bps hike”.