Brazil | The risk of further monetary tightening raises as the fiscal situation worsens

Summary

The COPOM suggested that it will increase interest rates if the fiscal situation deteriorates further, which is more likely now after the launching of the impeachment process of President Rousseff. Anyway, our base scenario is for a stable Selic ahead, which was supported by the COPOM's forecast of inflation around the target in 2017, the monetary policy relevant horizon.

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