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BRAZIL: Analysts Tilting Towards 50BP Hike in November

BRAZIL
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  • Goldman Sachs: believe that “despite no explicit forward guidance at this stage it is quite likely that the Copom will accelerate the pace of rate hikes to 50bp at the next meeting.”
  • Itaú:The Copom minutes sent a clear message of cohesion amongst committee members regarding the gradual start of the tightening cycle. It also emphasized that the inflation target of 3% will be fully pursued, indicating no inclination to use the tolerance band around that target. The general message did not diverge from last week’s statement, with the positive output gap, asymmetric risks to the upside, and de-anchored expectations indicating, in Itau’s view, that the next move will likely be a 50-bp hike.
  • Deutsche Bank: The statement sent strong signals that the BCB will have to accelerate to 50bp hike to deal with unanchored expectations, stalled disinflation, and an economy that has expanded faster than potential. DB expect the cycle to end at 12.0% - with hikes of 50bp next. The skew is tilted to either higher terminal rates or 12.0% for longer.
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  • Goldman Sachs: believe that “despite no explicit forward guidance at this stage it is quite likely that the Copom will accelerate the pace of rate hikes to 50bp at the next meeting.”
  • Itaú:The Copom minutes sent a clear message of cohesion amongst committee members regarding the gradual start of the tightening cycle. It also emphasized that the inflation target of 3% will be fully pursued, indicating no inclination to use the tolerance band around that target. The general message did not diverge from last week’s statement, with the positive output gap, asymmetric risks to the upside, and de-anchored expectations indicating, in Itau’s view, that the next move will likely be a 50-bp hike.
  • Deutsche Bank: The statement sent strong signals that the BCB will have to accelerate to 50bp hike to deal with unanchored expectations, stalled disinflation, and an economy that has expanded faster than potential. DB expect the cycle to end at 12.0% - with hikes of 50bp next. The skew is tilted to either higher terminal rates or 12.0% for longer.