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MNI BCB Review– Dec'24: Hawkish Copom Signals Aggressive Hikes

The Copom accelerated the tightening cycle again with a bold 100bp hike of the Selic rate to 12.25%.
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Executive Summary

  • The Copom accelerated the tightening cycle again with a bold 100bp hike of the Selic rate to 12.25%.
  • A majority of analysts had expected a 75bp hike, although a significant minority were looking for a 100bp move, which was also consistent with market pricing.
  • In an explicitly hawkish statement, the Copom reintroduced forward guidance and indicated that additional hikes of 100bp would come in the next two meetings.
  • Analysts believe the front-loaded adjustment will help to contain pressure on local assets and inflation expectations, although some say that further fiscal measures are still needed to stabilise BRL.

Click to view the full review: MNI BCB Review - December 2024.pdf

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Executive Summary

  • The Copom accelerated the tightening cycle again with a bold 100bp hike of the Selic rate to 12.25%.
  • A majority of analysts had expected a 75bp hike, although a significant minority were looking for a 100bp move, which was also consistent with market pricing.
  • In an explicitly hawkish statement, the Copom reintroduced forward guidance and indicated that additional hikes of 100bp would come in the next two meetings.
  • Analysts believe the front-loaded adjustment will help to contain pressure on local assets and inflation expectations, although some say that further fiscal measures are still needed to stabilise BRL.

Click to view the full review: MNI BCB Review - December 2024.pdf