No Change Expected to Brazil Rate

Brazil’s central bank is widely expected to leave its monetary policy rate unchanged at 8.75% today after having cut 500bp so far this year. “It should surprise no one when the central bank stays on hold and keeps the policy interest rate once again unchanged at 8.75%,” says Morgan Stanley, which forecasts that the rate will increase to 11.00% by the end of 2010. Bank of America-Merrill Lynch expects the rate to remain unchanged at today’s meeting and Brazil to stick at 8.75% until 2011, as the country’s economy is recovering earlier and faster than most countries in the region. Market consensus is that it will climb above the 10.00% mark by the end of next year.