Archive

Brazil: 25bp Rate Hike To 15% (Consensus 14.75%) in Jun-25

• Brazil's Copom surprised markets by raising the Selic rate to 15.00%, citing persistent inflation and deanchored expectations, contrary to the consensus forecast for a pause.
• The decision reflects ongoing concern over resilient domestic demand, robust labour markets, and external uncertainties, with inflation expectations for 2025 and 2026 remaining above target.
• Future policy will likely see rates held at restrictive levels for a prolonged period, with further hikes possible if inflation risks intensify or expectations fail to converge, while any easing is contingent on clear evidence of disinflation and fiscal discipline.

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.

Brazil: 100bp Rate Hike To 14.25% (Consensus 14.25%) in Mar-25

• Brazil's Copom raised the Selic rate by 100bp to 14.25%, as expected, reinforcing its hawkish stance in response to rising inflation expectations and persistent price pressures.
• Despite early signs of moderating growth, upside inflation risks—including resilient services inflation, deanchoring expectations, and external vulnerabilities—justify continued policy tightening.
• Copom has signalled a smaller rate hike at the next meeting. Still, future decisions will remain data-dependent, with inflation expectations and global financial conditions playing a key role in the policy trajectory.

Oil Update: Pipe Dreams

• With so many conflicting signals emerging from the US Administration, it is not surprising that both investors and extractors are increasingly cautious about politicians’ aspirations for the hydrocarbons market in both the US and Canada. This may be some small consolation for Opec.

By Alastair Newton