Economists at Commerzbank analyze BRL outlook following Brazilian inflation figures.
Inflation price confirms BCB’s path of price cuts
Brazil’s inflation price rose as anticipated in August, however month-to-month inflation was barely beneath expectations. In mild of this improvement, even essentially the most skeptical ought to forgive the Banco Central do Brasil (BCB) for kicking off the rate-cutting cycle final month with a surprisingly sharp 50 bps minimize.
Moreover, with inflation anticipated to stay beneath 5% in the intervening time, the anticipated additional 50 bps easing at every of the remaining three conferences this yr to a coverage price of 11.75% by year-end is, in our view, removed from aggressive. We subsequently proceed to imagine that the Brazilian Actual’s robust degree is justified for now.