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.
Brazil Central Bank
Executive Summary:
- BCB expected to raise rates by 75bps to 4.25%.
- The persistence of rising inflation significantly increases the likelihood of the Copom removing their "partial" reference within the guidance for policy normalisation.
- The gradual contamination of 2022 expectations provide further evidence of the potential de-anchoring of medium-term expectations.
- Further signals of continued tightening should provide a consolidation of most recent BRL gains and potentially be a catalyst for further appreciation.
MNI Brazil Central Bank Preview - June 2021.pdf
At Wednesday's meeting the Copom are expected to deliver their third consecutive 75bps hike, raising the Selic rate to 4.25%. The language of the post-meeting statement will be eagerly eyed to decipher clues relating to the likelihood and magnitude of future tightening. We believe the most likely scenario will be for another 75 basis point hike to be announced for the August meeting and place a high probability on the Copom enhancing their future flexibility by dropping the reference to partial normalisation at this meeting.
Overall, we see the development of inflationary pressures requiring the most attention and a clear hawkish tilt to the guidance in the statement should be expected.
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.