Ex BCB Director Sees Rate Hike in June

The Brazil central Bank will release the minutes from their latest meeting tomorrow at 1100GMT/0600ET. The minutes bring an opportunity for the Copom to offer some clearer hints on the timing, pace and conditions for the start of policy normalization. Given the shift upward in the yield curve following the removal of the forward guidance, markets will be monitoring the language and emphasis around inflation expectations and the near-term outlook closely.

On Friday, Reinaldo Le Grazie, a former director of monetary policy at Brazil's central bank and head of Panamby fund's investment committee, made comments in an interview:

• BCB should begin its rate-increase cycle at June's monetary policy meeting, amid faster-than-expected inflation and a faltering economic recovery.
• BCB is likely to start with a 25bp increase in June.
• Does not rule out postponing the start of the normalisation process and promoting a more aggressive Selic rate hike later.
• Panamby fund also lowered its 2021 Brazil's GDP forecast to +3.0% from +3.5% amid the slower-than-expected pace of vaccination campaigns.