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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
MNI BCB Preview - Dec 2021
Executive Summary
- In line with the guidance from the October meeting statement, the Copom will likely raise the Selic rate by a further 150bp this week, to 9.25%.
- IPCA inflation hovering just below 11%, as well as the continued pressure on 2022 inflation expectations, confirm the need for further aggressive monetary tightening.
- Calls for an even greater acceleration of monetary tightening have largely been dispelled given the latest dip in GDP figures, combined with the reductions to 2022 growth expectations.
Click to view the full preview: MNI Brazil Central Bank Preview - December 2021.pdf
Relentless Surge In Consumer Prices
- Mid-month IPCA inflation in Brazil reached 10.73% Y/y slightly above the expected level of 10.69% and well above the prior reading of 10.34%. According to the latest BCB Focus survey, economists forecast inflation to end 2021 at 10.18%, a considerable increase from the projections at the October meeting of just 8.96%.
- Perhaps more importantly, the same survey now forecasts 2022 year-end inflation to reach 5.02%. Up from 4.4% before the October meeting, this represents the first breach of the upper tolerance band of the 2022 target of 5%. The continuing deterioration of medium-term expectations will remain the primary concern of the committee and should prompt further aggressive monetary policy tightening.
Source: Brazil Central Bank
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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