Heteronomics Archive

May 07, 2025

Brazil: 50bp Rate Hike To 14.75% (Consensus 14.75%) in May-25

Brazil's Copom raised the Selic rate by 50bp to 14.75%, as expected, slowing the pace of tightening while maintaining a restrictive stance amid persistent inflation pressures.
Despite early signs of growth moderation, inflation expectations remain deanchored, and inflation readings are elevated, justifying continued policy restraint over a prolonged period.
Future decisions will reflect heightened uncertainty and the advanced tightening stage, with Copom signalling greater flexibility and data-dependence in calibrating the path to price stability.

May 07, 2025

As expected, the Federal Reserve held the policy rate steady at 4.25%–4.50%, citing increased uncertainty and elevated risks to inflation and employment.
Core PCE inflation remains above target at 2.6%, with recent tariff increases raising near-term inflation expectations and clouding the outlook.
The Fed remains in wait-and-see mode, with future policy shifts contingent on how evolving trade and fiscal policies affect inflation persistence and labour market stability.

May 01, 2025

The BoJ held the policy rate steady at 0.5%, in line with expectations, while market sentiment shifted more dovishly, reducing the perceived likelihood of further rate hikes.
Growth and inflation forecasts for 2025–26 have been revised down, with underlying inflation expected to remain weak and only gradually return to target levels as wage pressures intensify.
Despite maintaining a tightening bias, the BoJ’s emphasis on downside risks and its data-dependent approach suggests a slow and cautious path toward further policy normalisation.

April 30, 2025

Banco de la República unanimously cut its benchmark rate by 25bps to 9.25%, surprising consensus expectations for no change and breaking a recent streak of unexpected holds.
Inflation resumed its downward path, with core and headline figures easing and market-based expectations declining, supporting a measured policy loosening stance.
While domestic demand remains resilient and growth forecasts have been upgraded, external financing conditions and fiscal uncertainty continue to pose constraints on the pace of further easing.