Brazilian central bank likely to lower Selic policy rate in July

The Brazilian central bank is likely to meet next week for its monetary policy meeting. According to a Scotiabank research report, the Central Bank of Brazil is expected to lower its Selic policy rate by 100 basis points. It is an almost unanimous call amongst private forecasters and it would follow up a 100 basis points cut on May 31. If it happens, then it will bring cumulative easing since last October to five full percentage points from a cycle peak of 14.25 percent.

A slightly larger-than-expected drop in inflation to 2.8 percent year-on-year in July continues to bring inflation down from a peak of 10.8 percent in February of last year, stated Scotiabank. Brazilian growth rate cam in the positive territory in the first quarter in sequential terms for the first time in nine quarters; however, consensus expects growth to disappear with a flat print in the second quarter, added Scotiabank.