COPOM focuses at taking inflation to the 4.5% target by 2016

Summary

The minutes of last week's monetary policy meeting in which the SELIC rate was hiked by 50bp to 11.75% show that the plan of the Monetary Policy Committee (COPOM) is to take inflation back to the 4.5% target by 2016. To do so the monetary authority seems to count on more supportive fiscal and quasi-fiscal policies from now on. In the short-term, ongoing inflationary pressures driven by the exchange rate depreciation and administered prices should be fought with additional adjustments in the SELIC, to be implemented "with parsimony".

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