The Brazilian central bank’s larger-than-expected 50bp reduction in the Selic rate last night to 6.00%, and hints of more stimulus, have prompted us to pencil in an additional two 25bp rate cuts this year. We now expect the Selic rate to end this year and next at 5.50% (previously 6.00% at end-19, 5.75% end-20). Unlike markets, we think rates will remain at historically low levels for the foreseeable future.
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