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Brazil’s central bank sets a high bar for easing

The Brazilian Central Bank’s (BCB’s) cautious statement from last night’s meeting will disappoint the markets, which had expected Copom to lay the ground for the start of an easing cycle. With the economy probably now in recession and inflation falling, we expect one 25bp rate cut this year. But the markets, which are now pricing in 75bp of cuts this year, have probably got ahead of themselves.

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