Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
MNI BCB Preview - December 2022
Executive Summary
- All surveyed analysts expect the Copom to keep the Selic rate unchanged at 13.75%.
- Despite a further easing of inflationary pressures, lingering concerns surrounding the new administration and the fiscal outlook should prompt the BCB board to maintain a hawkish stance, highlighting the committee stand ready “to resume the tightening cycle if the disinflationary process does not proceed as expected”.
- The bulk of sell-side analysts are in agreement that the rising pricing for further hikes across 2023 is more a reflection of fiscal risk premiums, with the next move for the BCB more likely a cut - which some see as soon as March next year.
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MNI Brazil Central Bank Preview - December 2022.pdf
Spending Bill and President-Elect’s Cabinet Choices In Focus
Ongoing negotiations regarding the proposal to exclude the Auxílio Brasil program from the spending cap as well as cabinet nominations for the incoming administration continue to dictate the short-term tone for local asset prices. Local news has been suggesting the negotiation of the total amount out of the cap could be between BRL 150-175 billion, smaller than the BRL 200 billion first proposed, however the timeframe for which the removal will be in place remains a key concern. The debate over the draft and the subsequent vote looks likely to conclude around Wednesday which may make it difficult for the Copom to assess any particular consequences with any degree of accuracy. With uncertainty surrounding the short-term news flow and the potential redesign of Brazil’s fiscal framework next year, fiscal discussions are likely to dominate the debate among the BCB board in coming monetary policy meetings.
Regarding cabinet picks and President-Elect’s choice for finance minister, Lula said last week that his decisions will be announced after Dec. 12. Former Sao Paulo Mayor, Fernando Haddad, continues to be the front-runner and although this news was met with a negative reaction in markets, both Lula and his rhetoric surrounding fiscal responsibility have calmed markets for now.
Disinflation Process Continues, Expectations Deteriorate Slightly
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.