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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

Brazil: 100bp Rate Hike To 13.25% (Consensus 13.25%) in Jan-25

• Brazil's Copom unsurprisingly raised the Selic rate by 100bp to 13.25%, continuing its aggressive tightening cycle to counter rising inflation expectations and persistent inflationary pressures.
• Elevated services inflation, labour market resilience, currency depreciation, and fiscal risks necessitate further contractionary policy, with inflation risks skewed to the upside.
• Copom anticipates another 100bp hike at the next meeting but remains data-dependent beyond that, with inflation expectations, fiscal policy developments, and global risks guiding future decisions.

Oil in 2025

• The threat of trade wars makes forecasting the oil price this year unusually hazardous. However, based on the ‘known knowns’, one can safely assume that the downward pressure we saw through 2024 will persist. My forecast for Brent crude on 31 December is, therefore, USD65 per barrel.

By Alastair Newton