Brazil: One more cut and done

The statement accompanying last night’s Copom meeting gave a clear signal that there will be just one more 50bp interest rate cut in the current cycle (to 4.50%), which should temper expectations in the market for more aggressive rate cuts in the next few months. Equally, we don’t see the conditions falling into place that will prompt the rate hikes in 2021 that Copom hinted at and that markets are pricing in.