Several Tones Higher

BRAZIL ECONOMICS - Report 01 Aug 2024 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

There was no surprise in the decision to maintain the benchmark interest rate at 10.50% per annum, but the tone of the Copom's Statament was much harsher than in the previous meeting, although not as severe as some had imagined.

Several issues seem to capture the Central Bank's consideration. One is currency depreciation, attributed not only to external events but also—and mainly—to negative developments in the fiscal area, another central theme of the statement. In the Central Bank's words:
" The Committee monitors closely how the recent developments on the fiscal side impact monetary policy and financial assets. The perception of agents about the fiscal scenario, coupled with other factors, has also impacted asset prices [i.e., the exchange rate] and expectations." [our emphasis].

The third theme, echoing Copom’s past concerns, is the unmooring of inflation expectations, also attributed, at least in part, to the perception of worsening fiscal conditions.

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This report is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This report is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this report or its contents.