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MNI BCB Review - March 2022: 100BP Hike, Signal Same In May

MNI BCB Review - March 2022

Executive Summary

  • At the March 16 meeting, the Copom unanimously decided to increase the Selic rate by 100bps to 11.75%.
  • In very similar language used previously, the Committee stated that “given its inflation projections and the risk of a deanchoring of long-term expectations, it is appropriate to continue advancing in the process of monetary tightening significantly into an even more restrictive territory.”
  • Most notably, the committee foresees another adjustment of the same magnitude at the following meeting in May, which would drive the Selic rate to 12.75%, aligning with the current year-end Selic rate projection within the most recent central bank Focus Survey.
  • While analysts picked up on both hawkish and dovish parts to the statement, they do note that they expect the policy tightening cycle to extend into the June meeting with rates eventually breaching 13.00%, but perhaps undershooting market pricing for the terminal rate.

Click to view the full review: MNI BCB Review - March 2022.pdf

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LatAm Bank - ReviewAnalysisEM Central Bank ReportsEM Market AnalysisEM Central Bank ReviewEmerging Market NewsCentral Bank of Brazil - Review

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