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JPMorgan and Goldman Sachs Both Forecasting August BCB Cut

BRAZIL
  • JPMorgan said “with the board currently divided, we see a high probability that the COPOM will be split about the appropriate monetary stance in August. Our best guess at this time is that the majority votes for a 25bp cut.”
    • They added that they are “still unsure about the end of the easing cycle and the sustainability of the disinflation trend, but for now we are anticipating that the first 25bp cut will be followed by 50bp installments until the SELIC rate reaches 10% by mid-next year.”
  • Goldman Sachs are also now expecting an August move with a 25bp Selic rate cut. GS did note that overall, the Copom did not signal (explicitly or implicitly) a rate cut at the August meeting.
  • However, by adopting a more neutral data-dependent bias, alongside the fact that the majority of the directors see the possibly for a “parsimonious” inflexion point at the August meeting, it did indirectly signal that if the current and prospective inflation environment and balance of risks continue to improve and the June 29 National Monetary Council (CMN) decision on the 2024-26 inflation targets does not unsettle the market, August will be a “live meeting” for a rate cut, and GS expect the Copom to act on it.
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