Brazil: Policy rate at 5.00% by end 2021 – Rabobank

The BRL posted on Thursday an all time low of 5.1084 per USD. Strategists at Rabobank analyze the outlook for the Brazilian economy.

Key quotes

“We keep looking for one more rate cut of 25bps in the next meeting in May, with the Selic ending the year at 3.50% p.a., and still foresee the policy rate at 5.00% by end 2021.”

“IBGE releases March mid-month inflation (IPCA-15) report (Wed.), and we expect a timid gain of 0.07% m/m. Our estimate implies that the annual change will recede to 3.7% y/y (from: 4.2% y/y), bringing the headline back below the BCB’s mid-target (of 4.00%) for 2020.”