Financial institutions give Copom forecasts

Forty financial institutions polled by AE-Brazil expect the central bank's monetary policy committee, Copom, to cut Brazil's 22% base rate by at 1.5 to 3 percentage points. Copom ends its two-day meeting to decide the matter on Wednesday. Of the institutions polled, 27 or 67.5% expect a 2 point cut, eight (20%) expect a 2.5 point reduction, three (7.5%) foresee a 1.5 to 2 point cut, one (2.5%) a 2 to 2.5 point reduction and another foresees a cut of 2.5 to 3 points. "I don't think Copom will cut the rate by over two points. This is partly because it won't want to give the market the impression that its loosening of monetary policy is coming to an end," said Eduardo Berger from Lloyds TSB. "Copom has to wait for the effect to be felt of previous cuts and of the reduction (to 45% from 60%) of the compulsory reserves local banks have in the central bank," added Alexandre Litz from BNP Paribas. by Francisco Carlos de Assis