Analysts predicted that the bank's monetary policy committee (Copom) will wind up its meeting Wednesday with the announcement of a quarter-percentage point cut following a bank forecast of 1.6 percent growth in Brazil's GDP.

"We expect a quarter-percentage point cut at the (Copom) meeting which ends Wednesday," said economist Felipe Queiroz of the Brazilian agency Austin Rating.

"The cut cycle (begun in August 2011) has already had its effects and without generating inflationary pressure," he added. "Now it (the bank) should close this cycle and we expect the interest rate to stay at 7.25 percent this year," he added.

Economist Octavio Barros, head of Bradesco bank's economic research department, for his part did not rule out a rate cut to seven percent by the end of the year.

The government, which has launched a series of stimulus measures this year, is banking on two percent GDP growth this year while market analysts are forecasting a rise of only 1.25 percent.