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BRAZIL: BCB's Campos Neto Says Any Rate Adjustments Would Be Gradual

BRAZIL
  • Comments from the BCB’s Campos Neto have hit the wires, with the governor noting that the risk premium in the curve is not compatible with the Bank’s message and that any adjustment in the Selic rate, if needed, would be gradual.
  • Following his comments, short-term swap rates have declined, as pricing for a rate hike in September eased, with market expectations shifting towards a 25bp move, rather than 50bp.
  • Following today’s FX intervention, the first since December 2021, Campos Neto also said that the central bank will do more intervention if needed, and that it only intervenes when there’s disfunction. He said that today's intervention was due to an index rebalancing.
    • *CAMPOS NETO SEES RISK PREMIUM THAT'S NOT COMPATIBLE W/MESSAGE
    • *CAMPOS NETO: IF AND WHEN RATES ARE ADJUSTED, IT WILL BE GRADUAL
    • "*CAMPOS NETO: FX INTERVENTION IS DUE TO REBALANCING OF INDEX"
    • "*BRAZIL'S CAMPOS NETO: CURRENT MOMENT REQUIRES FLEXIBILITY"
    • "*BRAZIL'S CAMPOS NETO: WE ARE MORE DATA-DEPENDENT" - BBG

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