January 31, 2024

Brazil Policy Rate 11.25% (consensus 11.25%) in Jan-24

  • The Banco Central do Brasil Copom cut the Selic rate to 11.25%, a move in line with consensus forecasts, amid a complex global economic scenario with ongoing inflationary challenges and labour market pressures.
  • While domestic economic indicators suggest a deceleration, the disinflationary trajectory and the closing gap towards inflation targets provide a basis for the current rate cut, with monetary policy remaining firmly contractionary.
  • Future interest rate decisions will be influenced by the trajectory of global economic conditions, the impact of fiscal policy on inflation expectations, and the balance of risks surrounding inflation dynamics and economic activity.

January 11, 2024

Brazil IPCA Inflation 4.62% y-o-y (consensus 4.5%) in Dec-23

- Brazil's IPCA inflation rate for December 2023 slowed slightly to 4.62% y-o-y, surpassing the consensus estimate of 4.5%.
- With this upside surprise, inflation remains close to the average of the past year, suggesting that progress towards the inflation target may have stalled.

December 20, 2023

Brazil Economic Activity Growth -0.06% m-o-m (consensus 0.1) in Oct-23

- Brazil's economic activity contracted by 0.06% in October 2023, missing the consensus estimate of 0.1% growth.
- The current contraction is the third consecutive one. It is also 0.14 percentage points worse than the one-year average and 0.22 percentage points below the long-run average, indicating a historically poor performance.

December 13, 2023

Brazil Policy Rate 11.75% (consensus 11.75%) in Dec-23

  • The Banco Central do Brasil Copom's reduction of the Selic rate to 11.75% aligns with expectations and is indicative of a cautious yet responsive approach to a less adverse global economic outlook and domestic inflationary pressures.
  • Copom's decision is based on a balanced assessment of risks, with a recognition of potential global persistent inflationary pressures and domestic output gap dynamics influencing future rate decisions.
  • The Committee projects continued rate cuts, maintaining a contractionary stance to ensure inflation expectations are anchored and emphasizing fiscal discipline as critical to the conduct of monetary policy.