"Give me a one-handed economist!"? President Truman used to ask. But look around the world at the moment, and it is divided between economists offering the kind of "on the one hand, on the other hand"? advice that so exasperated Truman.
Brazil's central bank clearly did not feel sitting on the fence was an option. It has just delivered a surprise 50 basis point cut. Financial markets' parsing of this unexpected move is that Brazil believes growth rather than inflation is its biggest concern. This has prompted economists at HSBC to wonder who might be next. "Will everyone now go Brazilian?"? it asks.
In a Global Research note to clients HSBC says:
Brazil’s move showed that EM central banks are more defensive than some might have thought. The trauma of 2008 simply sits too deep. Expect everyone, with only a few select exceptions like India, and perhaps Thailand, to lay off tightening for a while.
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