Standard Chartered’s Dan Pan expects Banco Central do Brasil (BCB) to continue its cautious easing cycle, projecting a 25bps cut at the 29 April meeting as inflation risks remain elevated. Pan highlights tight monetary policy, softening growth and a strong Brazilian Real (BRL) as allowing further cuts, and maintains its end-2026 policy rate forecast at 12.5%, with upside risks if domestic demand stays resilient.

BCB seen cutting cautiously but steadily

"We expect Banco Central do Brasil (BCB) to proceed cautiously with the easing cycle by lowering the policy rate by 25bps at the 29 April meeting."

"There may be room for a 50bps cut but resilient growth and a solid labour market should limit the urgency for a dovish surprise."

"BCB may leave the door open for additional easing, but we do not expect future moves to be laid out explicitly given high uncertainty over the energy price trajectory."

"The market has largely scaled back easing expectations for the year to c.100bps since the start of the war, but we think it may be overdone."

"We continue to see the end-2026 rate at 12.5%, although risks may be skewed to the upside if domestic demand continues to be resilient."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)