Itaú BBA - Copom Minutes: stable rates, as risks net out

Macro Brazil

< Back

Copom Minutes: stable rates, as risks net out

November 3, 2020

We see the minutes as consistent with our view that the committee will leave the base rate unchanged, at 2.0% pa, until late 2021.

For the version with all charts and tables, please open the attached pdf file

• 
In the minutes released this morning, the Copom assessed that the upward asymmetry in the inflation risk balance, caused by fiscal risks, is sufficient to compensate for the lower-than-target inflation forecasts in its baseline scenario. The committee also elucidated that prudential considerations motivated it to keep the statement that “the remaining space for the use of monetary policy, if any, must be small”. The Copom sees the conditions for its forward guidance as still in place, but clarified that changes in fiscal policy that affect the trajectory of public debt or compromise the fiscal anchor would motivate a reassessment, even if the spending ceiling is still nominally maintained. We see the minutes as consistent with our view that the committee will leave the base rate unchanged, at 2.0% pa, until late 2021.

For the version with all charts and tables, please open the attached pdf file



< Back