# Brazil's Larger-Than-Expected Rate Cut Is a Sign of More to Come

> Brazil's central bank cut its benchmark Selic rate by a half percentage point to a record low of 6%, more than the 18 of 45 economists surveyed by Bloomberg had forecast. Policymakers said below-target inflation forecasts for 2020 leave room for further easing, and the economy is expected to grow less than 1% this year.

- Date: 2019-08-01 · published 2019-08-01T12:00:00.000Z
- Category: macro · region Brazil · magnitude medium
- Page: https://feedsoft.ai/events/10779-brazil-s-larger-than-expected-rate-cut-is-a-sign-of-more-to-come
- Commodities: [Brazilian Real (BRL per USD)](https://feedsoft.ai/c/USDBRL.md)

## Why it matters

Lower Brazilian rates and expected further easing tend to weaken the real, which raises USD/BRL and can make dollar-priced Brazilian feed exports less competitive while supporting domestic demand.

## Read by commodity

- USDBRL: bullish ▲

## Linked price moves

| Commodity | Date | Window | Change % | z-score | Why linked |
| --- | --- | --- | --- | --- | --- |
| USDBRL | 2019-08-01 | 1 | +2.1% | 3.3 | A larger-than-expected 50bp Selic cut to a record-low 6% with signaled further easing reduces BRL carry appeal and yield support, plausibly driving capital outflows and BRL depreciation (higher BRL per USD), though other global factors (e.g., Fed/trade-war risk-off around the same date) may have also contributed. |
| USDBRL | 2019-08-07 | 5 | +6.1% | 2.8 | The larger-than-expected Selic cut to a record-low 6% on 2019-08-01, with signals of more easing, narrowed Brazil's interest-rate differential and weakened the real, which contributed to the BRL per USD rise in the window. |

## Similar past events

| Commodity | Date | Event | 5-day % | 20-day % |
| --- | --- | --- | --- | --- |
| USDBRL | 2021-10-28 | [Brazil's real drops as larger-than-expected rate hike fails to satisfy \| Financial Post](https://feedsoft.ai/events/44779-brazil-s-real-drops-as-larger-than-expected-rate-hike-fails-to-satisfy.md) | +0.7% | +0.2% |
| USDBRL | 2020-01-23 | [With a Big Crop Expected, Brazil's Soybean Harvest Is Slow](https://feedsoft.ai/events/54912-with-a-big-crop-expected-brazil-s-soybean-harvest-is-slow.md) | +0.7% | +4.8% |
| USDBRL | 2017-09-05 | [Brazil: Rate cuts to continue](https://feedsoft.ai/events/69154-brazil-rate-cuts-to-continue.md) | -1.3% | +0.9% |
| USDBRL | 2023-07-25 | [Brazil 50 basis-point rate cut comes into play as inflation edges lower](https://feedsoft.ai/events/35239-brazil-50-basis-point-rate-cut-comes-into-play-as-inflation-edges-lower.md) | +0.2% | +5.4% |
| USDBRL | 2024-07-31 | [Brazil holds interest rates as expected, flags 'greater caution'](https://feedsoft.ai/events/29477-brazil-holds-interest-rates-as-expected-flags-greater-caution.md) | -0.2% | -2.7% |

## Sources

- dailymaverick.co.za: https://www.dailymaverick.co.za/article/2019-08-01-brazils-larger-than-expected-rate-cut-is-a-sign-of-more-to-come/

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Data from Feedsoft AI (https://feedsoft.ai/). For information only; not investment advice.