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BRAZIL: Itaú Believe Copom Minutes More Hawkish Than Statement

BRAZIL
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  • According to Itaú, the minutes of the latest Copom meeting came in with a more hawkish tone than the statement. The text, rightly, stresses their concern with deterioration of expectations, and indicates that the Copom is monitoring economic activity, for signs of a steeper slowdown, which is not their base case (nor Itaú’s).
  • Copom directors have raise the alarm on a potential increase of the neutral rate due to even more expansionary fiscal and quasi fiscal policy. While on the whole hawkish, Itaú believe the text indicates that the committee will monitor economic activity, FX passthrough, and expectations – this may, or may not, be a ranking.
  • For now, Itaú forecast two more hikes after March, at a 75-bp pace, to end the cycle at 15.75%.
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  • According to Itaú, the minutes of the latest Copom meeting came in with a more hawkish tone than the statement. The text, rightly, stresses their concern with deterioration of expectations, and indicates that the Copom is monitoring economic activity, for signs of a steeper slowdown, which is not their base case (nor Itaú’s).
  • Copom directors have raise the alarm on a potential increase of the neutral rate due to even more expansionary fiscal and quasi fiscal policy. While on the whole hawkish, Itaú believe the text indicates that the committee will monitor economic activity, FX passthrough, and expectations – this may, or may not, be a ranking.
  • For now, Itaú forecast two more hikes after March, at a 75-bp pace, to end the cycle at 15.75%.