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SocGen Expect BCB To Maintain Current Pace Of Easing Through 2Q24

BRAZIL
  • SocGen think the BCB is likely to maintain the pace of easing at 50bp in March and beyond, noting that note that ex-ante real interest rates are falling but, at around 7.5%, remain twice as high as what BCB considers as a long-term neutral rate. They think that inflation will moderate from current levels in 2024-25 although the risks to inflation forecasts are probably tilted to the upside.
  • SocGen expect the BCB to maintain the current pace of easing through 2Q24. They think that given the economy has slowed, the BCB could continue to ease at the current pace through June before easing at a slower pace in 3Q24.
  • SocGen maintain their year-end Selic rate estimate of 8.75% in 2024 but raise their end-2025 forecast by 25bp to 8.25%. Given the uncertainty regarding the inflation outlook, the risks to their Selic rate forecast are also skewed to the upside – particularly in 2024.
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