Brazil May Not Cut Rates

Brazil’s central bank is expected to leave the monetary policy rate at 8.75% following Wednesday’s meeting, having reduced it by 500bp since the start of the year. “Both the communique and the minutes of the July meeting widely telegraphed the board’s intention to interrupt the easing cycle, in our view,” says Bank of America-Merrill Lynch, adding that the bank “could more forcefully signal its intention to leave rates at the current level for an extended period of time.” Morgan Stanley, which also sees Brazil pausing, says that some board members of the bank considered not cutting at the July meeting.