Brazil’s pension vote paves way for larger rate cuts

The large margin of victory for Brazil’s pension bill in its first vote in the lower house last night is likely to result in a rally in local markets later today, and makes an interest rate cut at the Copom meeting this month a done deal. We have also pencilled in an additional 50bp of cuts over the next 12 months. That said, we’re sceptical that the reform will lead to a marked improvement in near-term growth prospects.