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 - November 2023
Executive Summary
- All surveyed analysts believe the Copom will continue the easing cycle with another 50bp cut, bringing the Selic rate down to 12.25%.
- This would be in line with prior guidance from the committee and a unanimous decision would likely corroborate the most recent BCB rhetoric, that the entire committee are aligned with the short-term outlook for monetary policy.
- The tightening of global financial conditions and renewed domestic fiscal risks warrant caution, however, progress on inflation should allow the BCB to stick with the easing strategy laid out.
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MNI Brazil Central Bank Preview - Nov 2023.pdf
Global Financial Conditions and Domestic Fiscal Risks Warrant Extra Caution
The most interesting development in recent days has been the reemergence of fiscal uncertainties in Brazil. To recap, Finance Minister Haddad acknowledged that the fiscal scenario had become increasingly “challenging” on October 30, placing the blame on Brazil’s congress and Supreme Court. He stated that the President had expressed scepticism after hearing about the impact of tax benefits resulting from legislation and judicial rulings that have hurt federal revenue estimates and put the zero-deficit goal at risk.
Domestic fiscal uncertainty remains a key risk for the central bank. The board used the September statement to highlight that “given the importance of the execution of the fiscal targets already established for the anchoring of inflation expectations, and hence for the conduct of monetary policy, the Committee reinforces the importance of firmly pursuing those targets.” Combined with the tightening of global financial conditions the Copom may step up its language to convey a more cautious tone. However, qualitative progress on inflation should lead the BCB to continue with its strategy of monetary policy easing, sticking with its 50bp cutting pace and affirming the guidance for another 50bp reduction in December.
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.