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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessMNI BCB Review - October 2021: Even Further Into Restrictive Territory
Brazil Central Bank
Executive Summary:
- The Copom unanimously decided to hike the Selic rate by 150bps to 7.75%. The decision was in line with the majority of surveyed analysts, with several adjusting their calls in the preceding days to the decision.
- The monetary policy committee judged that, given the evolution of inflation forecasts and the negative shift for the balance of risks, the 150bp pace is most appropriate to guarantee inflation convergence to target.
- The Copom predict another 150bp hike at the December meeting and currently, their baseline scenario and balance of risks signal to advance the process of policy tightening "even further into the restrictive territory".
- Some analysts believe the statement had a dovish tilt, falling short of adequately hardening the language used relating to inflation, the balance of risks and the recent deterioration of the fiscal framework.
Click to view the full review: MNI BCB Review - October 2021.pdf
The monetary policy committee judged that, given the evolution of inflation forecasts and the negative shift for the balance of risks, the 150bp pace is most appropriate to guarantee inflation convergence to target. Currently, their baseline scenario and balance of risks signal to advance the process of policy tightening "even further into the restrictive territory".
The Copom predict another 150bp hike at the December meeting, with the usual caveat, that future policy decisions can be adjusted if necessary and will depend on the evolution of relevant factors associated with economic activity, the balance of risks and inflation expectations. Notably, the BCB also stated that growth indicators released since the September meeting displayed an evolution below expectations.
Analysts have acknowledged the Copom met market expectations with the pace acceleration and clear guidance of a similar size hike in December. However, some commentators believe the statement had a dovish tilt, falling short of adequately hardening the language used relating to inflation, the balance of risks and the recent deterioration of the fiscal framework.
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.