Banco Central do Brasil Monetary Policy Committee (Copom) decision:
1% rate hike to take the SELIC rate to 14.25%, from 13.25% previously
- Decision was unanimous.
- Committee anticipates another adjustment of smaller magnitude in the next meeting.
- Total magnitude of the tightening cycle will be determined by the firm commitment of reaching the inflation target.
- Total cycle magnitude will depend on inflation dynamics, expectations and projections, output gap, and balance of risks.
- Current scenario requires a more contractionary monetary policy.
- Global environment remains challenging due to the economic policy and outlook in the United States, mainly due to the uncertainty about the trade policy and its effects.
- Set of indicators on economic activity and labor market has been exhibiting strength, even though we observe signals that suggest an incipient moderation in growth.
- Headline inflation and measures of underlying inflation remain above the inflation target and have again increased in recent releases.
- Inflation scenarios remain tilted to the upside.
This article was written by Eamonn Sheridan at www.forexlive.com.