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MNI BCB Review - Surprise 75bps Hike

The full document including analyst reviews can be found here:

MNI BCB Review March.pdf

Yesterday, the Copom hiked the Selic Rate by 75 basis points to 2.75%. The decision was unanimous and was accompanied by a hawkish statement, expecting another 75 bps hike in May should inflation expectations and the balance of risks remain the same.

Markets had been pricing in around 60bps of hikes before the meeting and the vast majority of analysts had estimated just a 50 bps hike. Therefore, the Copom's "swifter adjustment" was a hawkish surprise. The statement mentions that this "has the benefit of reducing the probability of not meeting the inflation target in 2021, as well as of keeping longer horizon expectations well anchored".

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