The ephemerality of BCB's hawkish moments

By explicitly ruling out a cut in the SELIC rate for now, the monetary policy minutes released yesterday by the BCB sounded surprisingly hawkish. As surprising -although certainly not as hawkish- as yesterday's news, the monetary authority announced today that it will adjust reserve requirements to inject around USD13bn (0.6% of GDP) in the economy. By doing so the monetary authority seems to be more concerned about growth -and less about inflation- than it sounded yesterday, which should make more difficult the task of anchoring long-term inflation expectations (currently around 5.5%-6.0%, significantly above the 4.5% inflation target).

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