Pretty remarkable summary from Societe Generale on the Brazilian central bank:
The BCB has become a fundamentally dovish central bank. We expect the BCB to deliver another policy rate cut of 50bp tomorrow—in line with consensus expectations—with the risk that the cut may actually be larger. The DNA of the central bank has fundamentally changed under the new management, and the central bank's accommodative bias is now much stronger than it used to be, with less focus on fighting inflation as a policy objective. The local DI curve prices in a total of 150bp of cuts over the next 4 months, which seems broadly appropriate. Local rates are likely to continue grinding lower as the central bank maintains its dovish stance.
