The softer-than-expected Brazilian mid-month inflation reading for July, of 2.1% y/y, suggests that there is still scope for another interest rate cut in the current cycle. We expect a 25bp reduction in the Selic rate, to 2.00%, at the Copom meeting in early August. And weak price pressures should allow the central bank to keep rates at record low rates for longer than most seem to think.
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