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Itaú Expecting Unanimous Decision to Hold Selic Rate

BRAZIL
  • Itaú have noted the Copom meets after weeks of intense volatility in the markets – fuelled, along with other reasons, by the dissent in the previous decision. Itaú’s broad measure of country risk – which is based on asset prices and their relative performance – went up again after reaching post-pandemic lows earlier this year.
  • It’s reasonable to state that the domestic uncertainties mentioned in the committee’s latest communications remain elevated and might even have increased, particularly with regard to fiscal slippage.
  • Furthermore, the breakdown of May’s IPCA showed that core services inflation accelerated again at the margin and inflation expectations reported in the Focus survey rose significantly.
  • Under current economic conditions, even if exchange-rate performance improves, Itaú see that the committee will unanimously decide to maintain the current interest rate level of 10.50%.

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