September 25, 2024

Forceful Fed Rhymes From 1998
- The Fed’s 50bp rate cut was remarkably forceful relative to the resilient data. It relies on rates being far above their neutral setting despite no evidence for this tightness.
- Historical parallels to 1998 are mounting with the forceful start and conveniently timed political support. A repeat would mean an early pause and hikes returning in 2025.
- Brazil has tracked a year ahead of the Fed in the last hiking and cutting cycles. Its latest hike would also be consistent with the Fed following the 1998 scenario.
By Philip Rush
September 18, 2024

Brazil Policy Rate 10.75% (consensus 10.75%) in Sep-24
- Brazil's Copom raised the Selic rate by 25bps to 10.75%, in line with expectations, to counter persistent inflationary pressures amid stronger-than-expected domestic economic activity.
- Inflation expectations for 2024 and 2025 remain elevated, and Copom sees asymmetric risks, particularly from resilient services inflation, currency depreciation, and global uncertainties.
- Future rate adjustments will depend on inflation dynamics, expectations, and the global economic landscape, with the Committee committed to maintaining a contractionary stance to ensure inflation convergence toward its target.
July 31, 2024

Brazil Policy Rate 10.5% (consensus 10.5%) in Jul-24
- Maintaining the Selic rate at 10.50% was driven by global uncertainties, stronger domestic economic signals, and above-target core inflation, supporting a cautious yet vigilant monetary policy stance.
- Inflation expectations and projections for the coming years indicate a challenging but manageable path towards achieving the central bank’s targets, necessitating continued prudence in monetary adjustments.
- The Committee stresses the importance of a contractionary monetary policy in the medium term, emphasizing the role of credible fiscal management and ongoing risk assessments in shaping future interest rate decisions.
June 19, 2024

Brazil Policy Rate 10.5% (consensus 10.5%) in Jun-24
- Brazil's Copom maintained the Selic rate at 10.50%, consistent with expectations, emphasizing caution amid persistent global uncertainties and robust domestic economic activity.
- Inflation expectations for 2024 and 2025 remain close to targets, with the Committee highlighting risks from global inflationary pressures and resilient domestic services inflation.
- The decision underscores the importance of a contractionary monetary stance to consolidate disinflation and anchor inflation expectations, with future adjustments contingent on evolving economic conditions and fiscal policy commitments.
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