The market is mixed as to whether Brazil's central bank will cut interest rates next week due to low inflation or keep rates steady due to recent market volatility, a Reuters poll showed on Friday.
The survey found 11 out of 20 economists expected the bank's Monetary Policy Committee, or Copom, to shave 0.25 percentage point off its key Selic lending rate after its monthly meeting ends on Wednesday. However, the remaining nine economists said the bank would hold rates steady at 16 percent.
"Judging by the inflation numbers, (the central bank) will cut rates," said Alvaro Bandeira, an economist at Agora Senior CTMV brokerage. "Furthermore, we have very high interest rates."
Brazil's official IPCA inflation rate slowed for the third month running in April. In the 12 months to April, it has risen 5.26 percent, the lowest reading for a 12-month period since the year ended July 1999, and below the government's 5.5 percent inflation target for 2004.
But concerns the US Federal Reserve could soon hike rates, effectively taking the shine off emerging markets, has weakened Brazil's currency to the point where some investors fear it could fuel a rise in consumer prices.
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