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Brazil Economists Revise 2021 Year-End Selic Rate Higher

BRAZIL
  • Busy week approaching with the BCB on Wednesday following the FOMC announcement. So far, the majority of analysts are calling for a 50bps rate hike to 2.5%. The range of estimates for the Selic rate is between 2.00-2.50%, however, some analysts have mentioned how a hike greater than 50bps might be appropriate. A full preview of Wednesday's meeting will be published tomorrow.
  • A fairly strong close for the Real last week, pressuring support which lies at 5.5450, the March 4 low. Intervention via fx swaps and spot auctions have created a temporary tailwind for the local currency, rallying 6% off it's worst level last week. BCB action will be expected to maintain this momentum after a continuing deterioration of the Covid situation and the ongoing shaky political developments lingering in the background.
  • This morning: *Brazil economists revised their 2021 year-end selic rate up to 4.5%; prior 4%.

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