BRAZIL (Reuters) – The central bank kept the Selic rate at 13.75% on Wednesday in a unanimous decision by the Monetary Policy Committee, days before the second round of the presidential election. The board said in a statement that inflation remains high and will continue until disinflation picks up and expectations take hold.
MAURICIO ORENG, HEAD OF MACROECONOMIC RESEARCH, SANTANDER
“The decision to leave the strategy unchanged naturally reflects British Columbia’s continued confidence in its estimates and forecasts. With the current dose of monetary tightening, Copom estimates that inflation should move closer to the central target for the second quarter of 2024, which is currently the main monetary policy horizon. We see that BC has been managing inflationary risks “on its own” from now on, making its monetary policy more restrictive over time, keeping the exchange rate stable for some time, and adopting its future monetary policy measures in the wake of a gradual decline in expectations. . inflation. Our scenario assumes that the second quarter of 2023 will be the most restrictive monetary policy in more than 20 years.”
MARCO CARUSO, CHIEF ECONOMIST, ORIGINAL BANK
“There are few changes compared to the previous document. Those that could offer “more interest” had counterparts compatible with “less interest”, making the assessment neutral in our view compared to the current main interest path scenario. The IPCA score for closed years 2023 and 2024 deteriorated slightly; however, estimates six quarters ahead, which smooth out the impact of tax cuts on inflation and reflect the respective horizon of their decisions, improved to 3.2%, closer to their target. We see no reason to change our base case of stable interest rates at these levels until mid-2023.”
LEONARDO COSTA, ECONOMIST, ASA INVESTMENTS
“There was an increase in the forecast of the Central Bank for 2023 and 2024, and not only due to an upward revision of the administered one. This indicates a possible upward revision of the Central Bank’s neutral interest rate forecast. These are pretty modest reviews. All in all, a very neutral announcement and very in line with expectations, the flight plan is well thought out, keeping the interest rate for the long term, so it will take further deceleration of inflation to start talking about a fall. cyclical interest rates, this is for 2023 only.”
VITOR MARTELLO, CHIEF ECONOMIST, PARCITAS INVESTIMENTOS
“I believe they are using higher forecasts to show that they do not see opportunities for rate cuts anytime soon. In our view, if the core inflation pleasant surprise we saw in the October IPCA-15 becomes commonplace, Copom will likely be in a position to cut the Selic rate sooner than Focus suggests, probably in March. This is the most likely scenario for us, but we defend Copom’s current position that we do not proceed with our thesis until more data is collected, which may be premature, especially given electoral uncertainty and a turbulent external scenario.
Source: Istoe Dinheiro
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