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July 26, 2016

Brazil | The COPOM is still concerned about inflation

The minutes of last week's monetary policy meeting show that the Monetary Policy Committee (COPOM) is concerned about the fact that both market inflation expectations and some of its own forecasts continue to show inflation above 4.5% at the end of 2017. Taking that into account, the monetary authority concluded that “…ther…

June 16, 2016

Brazil | Still no room for a monetary easing

The minutes of last week's monetary policy meeting, the last before the replacement of Alexandre Tombini by Ilan Goldfajn as BCB governor, signaled that the conditions for the beginning a monetary easing cycle are still not given. In spite of the changes in its board, we expect the BCB to continue to hold this view. Therefo…

May 5, 2016

Brazil | Changes in the BCB board, rather than interest rate cuts, are on sight

The minutes of the previous monetary policy meeting showed that although concerns on inflation are declining, there is still no room for a monetary easing. We do not expect the Selic to be cut soon, but uncertainty is higher than usual as the vice-president Temer will likely assume presidential duties next week and a chang…

March 10, 2016

Brazil | Copom in wait-and-see mode

Even though inflation forecasts were revised upwards, the tone of the monetary policy minutes was not hawkish. The Copom refrained from signalling that either a tightening or an easing of monetary conditions is imminent. Hence, the minutes reinforced the view that the Selic rate will remain unchanged for some further time (…

January 28, 2016

Brazil | A more dovish Copom redirects its focus to the global environment

The minutes of last week's monetary policy meeting show that Copom is now more concerned about the evolution of the Chinese economy and oil markets, which "can strengthen the scenario of convergence of inflation to the 4.5% target in 2017". The more dovish tone used by the monetary authority supports our view that the Selic…

December 3, 2015

Brazil | The risk of further monetary tightening raises as the fiscal situation worsens

The COPOM suggested that it will increase interest rates if the fiscal situation deteriorates further, which is more likely now after the launching of the impeachment process of President Rousseff. Anyway, our base scenario is for a stable Selic ahead, which was supported by the COPOM's forecast of inflation around the targ…

October 29, 2015

Brazil | COPOM: the plan is still to leave interest rates unchanged

The minutes of last week's monetary policy meeting confirmed that the Monetary Policy Committee (COPOM) is now focused on making the inflation converge to the 4.5% target in 2017 rather than in 2016. This change of focus takes some pressure out of monetary policy. However, the fiscal situation is a bigger source of concern,…

September 10, 2015

Brazil | Copom sees 2016 inflation converging to the target, but also important risks

The monetary policy minutes revealed that the COPOM is now seeing inflation converging to 4.5% in 2016, which explains its decision to leave the Selic unchanged at 14.25%. However, it highlighted that some upside risks (mainly fiscal policy deterioration and exchange rate depreciation) require the monetary authority to rema…