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
MNI POV: Arguments for Greater Than "Partial" Normalisation May Be Building
The full preview with analyst views can be found here:
MNI Brazil Central Bank Preview May 2021.pdf
Prior Communication – In the March statement the BCB outlined their intentions for the May meeting clearly:
"For the next meeting, unless there is a significant change in inflation projections or in the balance of risks, the Committee foresees the continuation of the partial normalization process with another adjustment, of the same magnitude, in the degree of monetary stimulus."
While the board stress their decisions depend upon the evolution on a multitude of economic factors, there have been no data or events that might prompt any surprises at this meeting regarding the previous decision.
Markets – Participants will be focused on whether the central bank sticks to similar language used at the March meeting relating to a partial normalisation. Given the unanimous consensus for the decision on rates, clues on further tightening and the magnitude of those moves will be eagerly eyed for any potential marginal implications for markets.
State-Of-Play - Inflation expectations have been revised higher since the March meeting. The latest focus survey sees 2021 expectations at 5.04% up from 4.60% and 2022 year-end inflation at 3.61%, up from 3.50%. Considering the BCB believe the 2022 year-end figure to be the most relevant for the policy horizon, this increase, albeit small, is significant as it confirms a potential de-anchoring of medium-term expectations.
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.