Banco BTG Pactual SA (BBTG11) forecasts Brazil’s benchmark interest rate at 8.5 percent in May and sees room for an additional cut of 25 basis points in July, according to a report sent today by e-mail.
“One distinct possibility within that range of alternative scenarios would be for the committee to cut its base rate by 50 basis points in May, replicate at that point the 2005-07 rhetorical escalation with mention to even greater parsimony, and then close the cycle with a 25 basis-point cut in July,” economists Eduardo Loyo and Claudio Ferraz wrote in the report dated yesterday.
The central bank’s first use of the term ’parsimony’ was in the minutes of its April 2006 meeting, which, as it turned out, “telegraphed the return, in May, to the earlier 50 basis-point pace”, the economists wrote.
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