Brazil held interest rates steady at near-10-year high of 14.25 percent on Wednesday, but a cut is expected in the months ahead, said JPMorgan.
The country is struggling with a deep recession, with unemployment currently running at more than 11 percent.
But the Banco Central do Brasil has little room to move amid rampant inflation. Inflation rose to 9.32 percent in May, more than double the official middle of the Brazilian target range, on the back of rising government-controlled prices and a weaker real.
In a statement, the central bank said that the expectations for inflation to remain far from its targets did not provide room for it to ease monetary policy, Marketwatch reported.
Jahangir Aziz, head of emerging market economics at JPMorgan told CNBC's "Squawk Box" that the first rate cut would likely come in July, although it may be postponed due to high inflation.