Brazilian Real: Rate-cut pause but medium-term gains – Commerzbank
Commerzbank’s Norman Liebke expects the Central Bank of Brazil to pause its rate-cutting cycle at 13.75% amid fiscal and inflation concerns after Lula’s re-election. He notes unanchored inflation expectations but argues this is only a pause, with further cuts likely next year. Liebke sees scope for lower rates and anticipates the Brazilian Real will appreciate over the medium term.
Commerzbank's analyst Norman Liebke anticipates the Central Bank of Brazil will refrain from lowering interest rates at the upcoming decision, maintaining the rate at 13.75%. This pause is anticipated due to fiscal and inflation concerns in light of President Lula's recent re-election. Despite unanchored inflation expectations, Liebke believes this represents a temporary respite, with further rate cuts likely to follow next year.
He predicts the Brazilian Real will appreciate over the medium term, taking advantage of the potential rate cuts and improved economic outlook.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
