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BRAZIL: Galipolo Says Rates May Stay High For Longer, Oct Budget Balance Due

BRAZIL
BulletEM BulletEmerging Market News
  • Amid pressure on local assets yesterday, following disappointment with the details of the government’s spending cut plan, BCB monetary policy director Gabriel Galipolo said that the central bank may need to keep interest rates higher for longer. He reiterated the central bank’s concerns about unanchored inflation expectations and said that it will do what’s needed to tame inflation. As noted yesterday, JP Morgan raised their Selic rate forecast to a 14.25% peak next year, from 13%, now expecting a 100bp hike at the next Copom meeting.
  • On the data front, budget balance figures for October are released at 1130GMT(0630ET), with the primary balance expected to swing to a BRL 40.1bn surplus, from a BRL7.3bn deficit previously. Net debt figures will cross at the same time, while the unemployment rate is expected to dip to 6.2% in October, from 6.4%, at 1200GMT. Federal Debt figures also cross at 1830GMT(1330ET).
  • Meanwhile, Finance Minister Fernando Haddad, Planning Minister Simone Tebet and the BCB’s Galipolo will all attend the Annual Luncheon of Bank Directors (Febraban), with CEOs and sector leaders in Sao Paulo at 1430GMT(0930ET). Separately, President Lula is expected to name new directors for the BCB today or early next week, according to Chief of Staff Costa.
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  • Amid pressure on local assets yesterday, following disappointment with the details of the government’s spending cut plan, BCB monetary policy director Gabriel Galipolo said that the central bank may need to keep interest rates higher for longer. He reiterated the central bank’s concerns about unanchored inflation expectations and said that it will do what’s needed to tame inflation. As noted yesterday, JP Morgan raised their Selic rate forecast to a 14.25% peak next year, from 13%, now expecting a 100bp hike at the next Copom meeting.
  • On the data front, budget balance figures for October are released at 1130GMT(0630ET), with the primary balance expected to swing to a BRL 40.1bn surplus, from a BRL7.3bn deficit previously. Net debt figures will cross at the same time, while the unemployment rate is expected to dip to 6.2% in October, from 6.4%, at 1200GMT. Federal Debt figures also cross at 1830GMT(1330ET).
  • Meanwhile, Finance Minister Fernando Haddad, Planning Minister Simone Tebet and the BCB’s Galipolo will all attend the Annual Luncheon of Bank Directors (Febraban), with CEOs and sector leaders in Sao Paulo at 1430GMT(0930ET). Separately, President Lula is expected to name new directors for the BCB today or early next week, according to Chief of Staff Costa.