Standard Chartered\u2019s Dan Pan expects Banco Central do Brasil (BCB) to keep a cautious easing cycle, with a 25bps policy rate cut at the 29 April meeting. Inflation risks are described as still high.<\/p>\n
The note says tight monetary policy, softer growth and a strong Brazilian Real (BRL) could allow further cuts. It adds there may be room for a 50bps cut, but resilient growth and a solid labour market could reduce the chance of a larger move.<\/p>\n
BCB may keep the option of more easing, but future steps may not be set out clearly because of uncertainty around energy prices. The year\u2019s easing expectations are said to have been reduced to about 100bps since the start of the war.<\/p>\n
The end-2026 policy rate forecast is kept at 12.5%. The forecast includes upside risk if domestic demand remains resilient.<\/p>\n
We expect the Banco Central do Brasil to deliver a cautious 25 basis point rate cut at its meeting next week on April 29th. Recent data supports this slow approach, with the latest mid-month inflation figure for April coming in at a sticky 4.1% year-over-year. This should keep the central bank from moving too quickly.<\/p>\n
Traders should consider positioning for a steeper cutting cycle than the market is currently pricing. The market has factored in about 100 basis points of easing for the rest of 2026, but after the aggressive rate hikes we saw through 2025, there is room for more significant easing. This suggests opportunities in receiving fixed rates on interest rate swaps for longer-dated tenors.<\/p>\n
This expected cautiousness is supportive for the Brazilian Real, which has shown strength, holding below 4.95 against the US dollar. A small cut maintains the high-rate differential that attracts foreign capital, making long BRL positions attractive. The risk of a surprise 50 basis point cut seems low, given the national unemployment rate fell to 7.6% last quarter.<\/p>\n
Uncertainty around global energy prices means the central bank will likely avoid giving clear guidance on future moves. We see the end-of-year policy rate at 12.5%, but if domestic demand continues to surprise to the upside, rates could finish the year higher. Therefore, any positions should be managed carefully around key inflation and retail sales data releases.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Dan Pan sees Brazil\u2019s central bank cutting rates 25bps, cautiously, as inflation risks stay high.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-45750","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45750","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=45750"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45750\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=45750"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=45750"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=45750"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}