Good morning! Today, we talk about the most recent signaling from the Central Bank on interest rates. And pro-market Supreme Court decisions on a Petrobras labor dispute and the 2019 pension reform.
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Hawkish statement, dovish minutes
After issuing a hawkish statement following last week’s decision to leave Brazil’s benchmark interest rate unchanged at 13.75 percent, the Central Bank released the minutes of its Monetary Policy Committee meeting this morning.
- While there were some hawkish touches, the committee finally hinted at a rate cut in the near future â perhaps not in August, when it next meets, but likely on September 20.
What they are saying. At no point in last week’s policy statement were rate cuts put on the horizon. Today, however, the committee acknowledged an internal divergence “concerning the degree of signaling regarding the next steps.”
- “The prevailing view was that the continuation of the ongoing disinflationary process, with its consequent impact on expectations, might allow the necessary confidence to be built up to begin a parsimonious process of inflection...