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 - February 2023
Executive Summary
- All surveyed analysts expect the Copom to keep the Selic rate unchanged at 13.75%.
- Despite the most recent headline inflation data slipping below 6%, the deterioration of short and medium-term inflation expectations should support the theory that the BCB may have to keep rates at elevated levels for longer.
- Furthermore, a more uncertain fiscal outlook under the new Lula administration and scrutiny of the current monetary framework provides a more unsettled backdrop for the committee, which has the potential to upset the balance of risks.
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MNI Brazil Central Bank Preview - February 2023.pdf
Inflation Data Above Estimates, Expectations Deteriorate
During his first month in office, President Luiz Inacio Lula da Silva has more than once criticised the country’s high interest rates and has questioned the need for an autonomous central bank. While cabinet ministers have been quick to downplay the President’s comments and reaffirm the independence of the BCB, there remains a heightened sense of uncertainty for market participants. This has been particularly evident surrounding the debate around the economic/monetary framework and discussions over adjusting the inflation targets for the coming years.
Politics aside, the inflation outlook has deteriorated since the last Copom meeting. Mid-month January IPCA headline inflation saw another decline to 5.87% Y/y, which was marginally below the surveyed median estimate of 5.83% but showed another downtick from the pre-December meeting release of 6.17%. Despite this easing in the data, significant pressures on services and core inflation warrant the need to preserve the BCB’s restrictive monetary policy stance.
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.