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Leaves Selic Rate Unchanged at 2.00%, Removes Forward Guidance

BRAZIL

Brazil Central Bank Leaves Selic Rate Unchanged at 2.00%

  • Forward guidance no longer exists
  • Forward guidance conditions no longer satisfying
  • Inflation expectations are closer to target
  • Forward guidance end doesn't mean rate hike now
  • Economy still needs extremely high stimulus
  • Commodity prices drive CPI forecasts higher
  • Still sees inflation shocks as temporary
  • Price shocks more persistent than expected
  • Monetary policy to follow balance of risks for the prospective inflation.
  • Late-2020 eco. indicators surprised postively
  • Uncertainty on growth is higher than usual
  • End of emergency aid increases uncertainty
Despite reiterating that the removal of forward guidance does not imply rate hikes and the economy still requires extremely high stimulus, this is a marginally hawkish statement given analysts' expectations were mixed on this subject.

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