Trade war between the USA and China may force the Brazilian Central Bank to 'practice lower interest rates', says Bradesco study; understand

The Monetary Policy Committee (Copom) meets next week, and the market, despite not wanting a new increase at this time for the Selic rate, may expect that it occurs — at least, by 0.50 percentage point (p.p.).

This is because, according to the Research and Economic Studies Department of Bradesco, in Brazil, the scenario remains challenging for the conduct of monetary policy.

The reciprocal tariff war announced by the United States (USA) and the subsequent retaliations with China resulted in a rise in global uncertainty indices to historic levels.

"Although tariffs have an inflationary bias for the USA, we believe that the excess supply of Chinese industrial goods will result in a slight deceleration of prices in Brazil," they say. "Our new hypotheses contemplate the bullish bias of Brazilian activity that has been observed in the data from the first quarter, with the incorporation of global deceleration into our economy," they add.

However, the bank highlights that the effect on activity and prices, in the long term, opens room for the Central Bank to practice slightly lower interest rates than in the previous scenario. https://www.moneytimes.com.br/china-x-eua-traz-um-mundo-mais-adverso-para-o-brasil-e-selic-a-1475-ao-fim-do-ciclo-segundo-analistas-visp/amp/