LATAM WEEKAHEAD-Brazil to fine tune rates, look past recession

By Walter Brandimarte

NEW YORK, June 7 (Reuters) - Brazil is expected to reduce the pace of interest rate cuts this week, with policymakers looking beyond economic data that will confirm Latin America's largest economy slipped into recession between the end of 2008 and beginning of this year.

Brazil will be at the center of Latin American investors' radar this week, with a series of growth and inflation data on tap before the central bank's rate-setting meeting late on Wednesday.

Early on Tuesday, the country's gross domestic product data is expected to show the economy slipped into technical recession by contracting for two consecutive quarters.

Economists surveyed by Reuters expect a 2.1 percent contraction in the first three months of the year, in comparison with the previous quarter.

But, rather than looking at past growth data, the central bank will likely focus on a combination of declining inflation and incipient signs of recovery to cut interest rates, but at a slower pace.

Nineteen out of 30 analysts surveyed by Reuters expect the bank to reduce the benchmark Selic rate by 75 basis points, from its current level of 10.25 percent. Ten bet on a steeper 100-basis-points reduction and only one on a more modest 50-basis-points cut.

The central bank has already slashed rates by 350 basis points in four consecutive rate cuts so far this year.

"The policy-making environment seems to be changing. Policy is likely to become closer to the fine-tuning variety, rather than the more frantic approach of the past few months," Barclays Capital's analysts Guillermo Mondino and Jimena Zuniga wrote in a research note.