Thursday, 22 January 2009

Goldman Sachs Believes Significant Portion of Selic Reduction Was Carried Out Last Night

Goldman Sachs Group Inc. analysts Alberto Ramos and Luiz F. Cezario wrote in a short note this morning that the BCB last night ''revealed a preference to front-loaded the rate easing cycle and it communicates so not only by delivering a cut at the top end of the analysts’ forecast but by also mentioning explicitly that the 100 basis point cut constitutes a substantial part of the envisaged policy rate cuts.´´ GS will wait until next week, when the minutes of yesterday's meeting will be unveiled, to reaffirm its stance. In their words, ''the easing cycle might turn out to be a front-loaded one, but not necessarily one that ends up delivering cumulative rate cuts beyond what the market is expecting.´´ This has happened already (Do you remember the easing cycle of 2003-2004, where rates fell less than what most analysts expected?) Unless inflation pressures continue to subside significantly, said the analysts, the Copom is unlikely to deliver similar rate reductions to yesterday's.

No comments:

Post a Comment