Brazil: All eyes remain on upcoming presidential elections – Standard Chartered

According to Mike Moran, Chief Economist at Standard Chartered, Brazil’s October presidential election remains ‘top of mind’ for investors, and is potentially one of the most unpredictable political contests of 2018.

Key Quotes

“Uncertainty over the likely composition of the field of candidates is likely to extend throughout the next several months. In the meantime, Banco Central do Brazil (BCB) served up a little surprise of its own at the latest policy meeting, signalling in no uncertain terms that it may not be done with the current easing cycle. With a May rate cut now likely, the question is whether there is scope for more cuts – this is not the first time BCB has reconsidered its stance.”

“The inflation outlook continues to soften and, while cyclical tailwinds and low base effects have supported the growth recovery so far, their impact may become more marginal further along in 2018.”

“Our growth forecasts have been at the low end of consensus since the start of the year; we remain comfortable with this view as high corporate leverage and an uneven credit cycle could prevent Brazil from registering a more full-blooded recovery.”