The decision by Brazil’s COPOM to cut the benchmark Selic interest rate by only 25bp (rather than 50bp), combined with a slightly less dovish accompanying statement than some had expected, reinforces our view that easing over the next 6-9 months will be gradual. As things stand, we remain comfortable with our forecast for COPOM to continue moving in steps of 25bp over the next few meetings, and to cut rates by a total of 250bp (to 11.50%) by end-17. This is less easing than the market is pricing in.
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