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LATAM: Analyst Views Ahead Of Tomorrow's Copom Minutes

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  • Goldman Sachs expects the minutes to show the Copom’s determination to drive inflation to the target amidst an overheated economy and un-anchored inflation expectations. They will be looking for discussion about the depth of the hiking cycle and the near-term calibration of monetary policy and the set of conditions that would demand the acceleration of rate hikes. They will also look out for updated discussion about the labour market, wage pressures and cost-push pressures on inflation, and updated estimates of the output gap.
  • Itaú notes that the Copom statement left the pace and size of the cycle open, with the committee saying it will monitor the behaviour of the output gap, inflation, inflation expectations, their own projections and the balance of risks to decide the next steps in its monetary policy strategy. Itaú believes that the statement indicates that the next move will be a 50bp hike, unless the scenario improves materially.
  • JP Morgan also highlighted the Board’s willingness to take decisive actions if required by the balance of risks, leaving its options open in terms of the pace and length of the cycle. They expect three more 25bp hikes over the next few meetings, but acknowledge that the risks are tilted towards the BCB hiking by more.
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  • Goldman Sachs expects the minutes to show the Copom’s determination to drive inflation to the target amidst an overheated economy and un-anchored inflation expectations. They will be looking for discussion about the depth of the hiking cycle and the near-term calibration of monetary policy and the set of conditions that would demand the acceleration of rate hikes. They will also look out for updated discussion about the labour market, wage pressures and cost-push pressures on inflation, and updated estimates of the output gap.
  • Itaú notes that the Copom statement left the pace and size of the cycle open, with the committee saying it will monitor the behaviour of the output gap, inflation, inflation expectations, their own projections and the balance of risks to decide the next steps in its monetary policy strategy. Itaú believes that the statement indicates that the next move will be a 50bp hike, unless the scenario improves materially.
  • JP Morgan also highlighted the Board’s willingness to take decisive actions if required by the balance of risks, leaving its options open in terms of the pace and length of the cycle. They expect three more 25bp hikes over the next few meetings, but acknowledge that the risks are tilted towards the BCB hiking by more.