Copom cuts, Venezuelan oil to the rescue?

Brazil's central bank kicked off its easing cycle this week and, given how high real interest rates are, we think that it's one of the few EMs that has room to loosen policy further even if global energy prices remain high for a prolonged period. Policymakers in Chile and Mexico are likely to stand pat at their meetings next week. And, in contrast to Brazil, a worsening of the energy shock would probably bring interest rate hikes on to the agenda. Elsewhere, the easing of sanctions on Venezuela's state-oil company PDVSA by the US government is unlikely to lead to any substantial increase in oil production over the coming months.