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XP Reduce Terminal Selic Rate Forecast To 10.00%

BRAZIL
  • In line with their most recent USDBRL forecast adjustments, XP have reduced their terminal Selic rate forecast from 10.50% to 10.00%. This follows the earlier BCB Focus survey, where economists now predict the year-end Selic rate will be 9.00%.
  • According to XP, options markets are pricing in a 75% chance of a 50bps cut in September and 20% chance of a 75bps cut in the following meeting. Thus, XP are maintaining their call of three 50bp cuts in the remaining meetings of 2023, with the Selic reaching 11.75%.
  • The new terminal rate call follows their USDBRL revisions of 4.70 at the end of 2023 (5.00 prior) and 4.85 at the end of 2024 (5.15 prior).

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