BCB likely to cut rate by 50bp in H2 2016

In fact, one cannot rule out further monetary tightening in this cycle given the pressure on the BRL, although that is not our baseline scenario. 

In any case, such a rate hike would be seen as an effort to ensure financial stability and not primarily due to further inflationary pressure in the country. 

"A rate cut of only 50bp in 2016 is expected, vs a 125bp rate cut previously. The consensus view of a rate cut of about 175bp in 2016 is probably too optimistic", said Societe Generale.