BCB Decision to Give Clue on Sub-4% Rate Future

• Market expectations for Brazil’s first monetary policy meeting of the year oscillated significantly over the six weeks since the Dec 11 gathering.
• A slightly hawkish, though rather vague, central bank statement then had left markets torn between bets on a hold or a small cut in the policy rate.
• Growth frustrations and rising concerns on the economic impact of the coronavirus outbreak have tipped our and the consensus expectation to a 25-basis-point cut to a record-low 4.25%.
• monetary policy dashboard shows that, while there still is room for an accomodative policy, the space for additional cuts has narrowed in recent months.

(Source: Bloomberg)