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MNI BCB Review – Sep 2024: Copom Begins Tightening Cycle

The Copom started a tightening cycle with a 25bp hike in the Selic rate to 10.75%, in line with expectations.
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Executive Summary

  • The Copom started a tightening cycle with a 25bp hike in the Selic rate to 10.75%, in line with expectations.
  • The decision was unanimous as the committee struck a more hawkish tone, noting the stronger-than-expected economic activity data, emergence of a positive output gap and deteriorating inflation dynamics.
  • The committee left the guidance open ended, but by referencing a “cycle”, further hikes are indicated ahead.
  • Analysts expect further policy tightening to a likely peak early next year, with risks of a step-up in the tightening pace if FX weakness persists or the inflation outlook does not improve.

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

MNI (LONDON)

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Executive Summary

  • The Copom started a tightening cycle with a 25bp hike in the Selic rate to 10.75%, in line with expectations.
  • The decision was unanimous as the committee struck a more hawkish tone, noting the stronger-than-expected economic activity data, emergence of a positive output gap and deteriorating inflation dynamics.
  • The committee left the guidance open ended, but by referencing a “cycle”, further hikes are indicated ahead.
  • Analysts expect further policy tightening to a likely peak early next year, with risks of a step-up in the tightening pace if FX weakness persists or the inflation outlook does not improve.

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

MNI (LONDON)