Itaú BBA - Copom: interrupting the cycle

Macro Brazil

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Copom: interrupting the cycle

febrero 6, 2020

The Monetary Policy Committee (COPOM) cut the Selic rate to 4.25% p.a. and decided to interrupt the easing cycle.


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

 

 The Copom delivered the widely expected 25-bp rate cut, taking the Selic rate to 4.25% pa, and stated, clearly, that given the lagged effects of the easing cycle, it would be warranted to interrupt the process. We thus expect the authorities to leave the base rate unchanged at 4.25% until year-end. Coming decisions will be, as always, data dependent. It should be noted that, in their wording, the authorities’ opted for “interrupt” rather than “end”, which signals they may eventually, under appropriate circumstances, revisit the issue. The text suggests that easing might only resume if the inflation forecasts for 2021 begin to deviate from the 3.75% target. We´ll learn more about the Copom´s views with the release of the meeting minutes on Tuesday, February 11, at 08:00 AM.


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



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