Rate cuts back on the agenda for 2012

The rapid deterioration in the growth outlook for the developed world, and the deepening crisis in Europe in particular, should in time vindicate last month’s surprise (and controversial) decision by the Brazilian Central Bank to cut interest rates. Indeed, with growth in the region likely to slow by more than most expect over the next 6-9 months, we expect that policymakers elsewhere will ultimately follow the BCB’s lead.