August 20, 2024 11:16 GMT
BRAZIL: Wells Fargo Adjust Selic Rate Forecast, Campos Neto Speaks to Globo
BRAZIL
- Plenty of news in Brazil overnight to recap, starting with another forecast adjustment for the BCB. Wells Fargo are now expecting two 25bp hikes from the BCB before year-end, in September and November, taking the Selic rate to 11.00%. Wells Fargo cite the recent jump in economic activity combined with the recent acceleration of inflation. They also highlight that most recent comments from Lula are a “change from prior communications” that signal “a reduction in political pressure”. They believe the BCB could start to unwind restrictive monetary cycle by mid-2025, with rate cuts materializing in second half of the year.
- The change of forecast joins previously highlighted adjustments from both XP Investments and Legacy Capital. An interesting caveat to this development is comments made by Campos Neto to Globo, where the central bank chief recalled that the international scenario has improved a lot in recent weeks and warned that the market is talking about an interest rate hike, but economists are not. As a reminder, Monday’s Focus survey kept the year-end Selic rate forecast steady at 10.5%.
176 words