Sell-Side Revises Selic Expectations

The sell-side is getting more dovish on Brazil, with several revisions to the Selic outlook. Goldman Sachs predicts a 50bp cut Wednesday, while previously it expected a 25bp reduction, although it did not rule out a 50bp cut. By the end of the year, it expects cumulative rate cuts of 300bp, up from a previous forecast of 250bp. Credit Suisse’s revised forecast reflects the same reductions. The shop expects cumulative rate falls of 300bp by the end of 2009 to 11.25% starting with a 50bp drop today. JPMorgan meanwhile predicts the central bank will deliver a 75bp cut in the Selic rate to 13.0%. “We expect an additional 75bp reduction in March and two more cuts of 50bp in April and June,” adds the shop.