March 21, 2024 11:45 GMT
MNI BCB Review – March 2024: Guidance Tweak To Provide Flexibility Ahead
At the March 20 meeting, the Copom decided to cut the Selic rate by another 50bp to 10.75%, as was widely expected, while tweaking its forward guidance.
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Executive Summary
- At the March 20 meeting, the Copom decided to cut the Selic rate by another 50bp to 10.75%, as was widely expected. The decision was adopted by all members of the committee.
- As had also been anticipated, the committee tweaked its forward guidance, now signalling “further reductions of the same magnitude in the next meeting”, rather than “meetings”.
- The central bank is therefore only guiding for one further 50bp cut in May, thus giving itself more room for manoeuvre in an uncertain environment for the meetings after.
- The marginally hawkish shift from the BCB, although broadly in line with expectations, may continue to weigh on USDBRL at Thursday’s open. This may risk the currency pair returning to its prior familiar range of 4.90-5.00, having threatened a bullish breakout earlier this week. Initial key support to watch lies at 4.9535, the Mar 14 low, with more meaningful support at 4.9027, the Jan 19 low.
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