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 - January 2024
Executive Summary
- All surveyed analysts believe that the Copom will continue the easing cycle with another 50bp cut, bringing the Selic rate down to 11.25%.
- Prior guidance in the December statement and most recent comments from central bank board members have reiterated that economic conditions remain consistent with this strategy.
- However, market participants will be alert for any tweaks to the statement that provide clues on whether the easing pace could be adjusted in the first half of 2024.
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MNI Brazil Central Bank Preview - January 2024.pdf
Fiscal Risks Remain As Government Discusses Payroll Tax Measures
Developments on the fiscal front could have a large bearing on monetary policy decisions in the comings months, but for now there appears to be little to derail the signalled 50bp rate cut. At first glance, the launching of the government’s BRL 300bn (3% of GDP) investment plan (with BRL 250 funded by Brazil’s development bank BNDES), looked more concerning. But almost all of these initiatives had been unveiled separately and hence the fiscal impacts had already been taken into account. Meanwhile, news that the government successfully sold a record $4.5bn of USD denominated bonds in January will be well received.
Inflation Pressures Easing, But Inflation Expectations Remain Above Target
The latest data revealed a larger-than-expected decline in CPI inflation in the first half of January, with the IPCA-15 measure printing at 4.47% y/y, vs. 4.63% expected. This is down from 4.72% in mid-December and a recent peak of 5.05% in mid-October. CPI inflation ended the year marginally above the BCB’s forecast, with core around target but core services inflation accelerating. However, this is unlikely to meaningfully change the BCB’s assessment at this point.
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.