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July 26, 2016
The minutes of last week's monetary policy meeting show that the Monetary Policy Committee (COPOM) is concerned about the fact that both market inflation expectations and some of its own forecasts continue to show inflation above 4.5% at the end of 2017. Taking that into account, the monetary authority concluded that “…there is no room for the easing of monetary policy”.
June 16, 2016
The minutes of last week's monetary policy meeting, the last before the replacement of Alexandre Tombini by Ilan Goldfajn as BCB governor, signaled that the conditions for the beginning a monetary easing cycle are still not given. In spite of the changes in its board, we expect the BCB to continue to hold this view. Therefore, we see unlikely a Selic cut in the short-term.
May 5, 2016
The minutes of the previous monetary policy meeting showed that although concerns on inflation are declining, there is still no room for a monetary easing. We do not expect the Selic to be cut soon, but uncertainty is higher than usual as the vice-president Temer will likely assume presidential duties next week and a change in the command of the BCB is a possibility.
March 10, 2016
Even though inflation forecasts were revised upwards, the tone of the monetary policy minutes was not hawkish. The Copom refrained from signalling that either a tightening or an easing of monetary conditions is imminent. Hence, the minutes reinforced the view that the Selic rate will remain unchanged for some further time (until the end of 2016, in our opinion).
January 28, 2016
The minutes of last week's monetary policy meeting show that Copom is now more concerned about the evolution of the Chinese economy and oil markets, which "can strengthen the scenario of convergence of inflation to the 4.5% target in 2017". The more dovish tone used by the monetary authority supports our view that the Selic will remain unchanged for some further time.
December 3, 2015
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.
October 29, 2015
The minutes of last week's monetary policy meeting confirmed that the Monetary Policy Committee (COPOM) is now focused on making the inflation converge to the 4.5% target in 2017 rather than in 2016. This change of focus takes some pressure out of monetary policy. However, the fiscal situation is a bigger source of concern, which requires the COPOM to remain "vigilant".
September 10, 2015
The monetary policy minutes revealed that the COPOM is now seeing inflation converging to 4.5% in 2016, which explains its decision to leave the Selic unchanged at 14.25%. However, it highlighted that some upside risks (mainly fiscal policy deterioration and exchange rate depreciation) require the monetary authority to remain vigilant.
June 11, 2015
The COPOM refrained from using the minutes of last week’s monetary policy meeting to commit to a specific strategy ahead. Although some signaling could be provided in the inflation report at the end of June, both maintaining the Selic at 13.75% -in our view the most likely scenario- and adjusting it up again remain as possible outcomes of the next monetary policy meeting.
May 7, 2015
The minutes of last week's monetary policy meeting suggest that the tightening cycle is not over yet. According to the COPOM, the efforts to drive inflation down to 4.5% by the end of 2016 are "still not sufficient" and therefore monetary policy must remain "vigilant". We take today's minutes as a sign that the SELIC will be adjusted by 50bp to 13.75% in June.
March 12, 2015
The monetary policy minutes revealed that the COPOM sees a deterioration in the risks for inflation in 2015 and believes that measures adopted up to now are insufficient to take inflation to 4.5% in 2016, signalling that the tightening cycle is not over. However, they showed that the COPOM is more optimistic on 2016 inflation, supporting the view of a 25bp hike in April.
December 11, 2014
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".
