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Copom's 'Swift Adjustment' Is A Hawkish Surprise

BRAZIL
  • A link to the full statement can be found here: https://www.bcb.gov.br/en/pressdetail/2381/nota
  • The decision was unanimous.
  • Copom decided to start a process of partial normalization.
  • "A swifter adjustment has the benefit of reducing the probability of not meeting the inflation target in 2021, as well as of keeping longer horizon expectations well anchored".
  • Headlines reporting a 75 bps hike at the following meeting a touch misleading as not a done deal:
  • "For the next meeting, unless there is a significant change in inflation projections or in the balance of risks, the Committee foresees the continuation of the partial normalization process with another adjustment, of the same magnitude, in the degree of monetary stimulus. The Copom emphasizes that its view for the next meeting will continue to depend on the evolution of economic activity, the balance of risks, and inflation projections and expectations."

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