Os Basic interest from Brazil must reach 14,25% This Wednesday (19), level that Selic was maintained previously in the interval of July 2015 to August 2016.
The Central Bank Monetary Policy Committee (BC) begins its two-day meeting to discuss the interest rate on Tuesday (18).
The expectation of the market is that the collegiate will comply with Selic at a percentage point. Today, after elevation of the same magnitude at this year’s first meeting.
Thus, no great surprises are expected by the decision itself. But the investors’ eyes will fall on the statement of this meeting.
“It will be important to observe the communication of Copom and eventual signs for future decisions,” said Bradesco in a report.
After March, putting their next monetary policy decisions under the responsibility of the coming data on the economic scenario.
BTG Pactual’s pre-boom research points to a market division regarding the posture that should be adopted by the monetary authority.
About 38% of respondents argue that the Copom should keep the door open and issue a statement “without explicit indication for the next meeting (…)”.
A slightly smaller portion says that Tom should be “indicating that Copom anticipates as more appropriate, at this time, the reduction of the rate of adjusting the basic interest rate at the next meeting.”
As for the factors that the BC has been closely observed, respondents see a worsening in the international scenario and economic activity of the January meeting for it. Already on the fiscal scenario and expectations for inflation were not observed relevant changes in the period.
For Gustavo Sung, chief economist at Suno Research, “The Economic Scenario [como um todo] It is slightly better than at the January meeting. ”
“We believe the committee should maintain a firm and cautious stance, with a tough statement, as well as in the last meetings, due to the uncertainties and challenges still present,” Sung concluded.
Resilient inflation
The fact is that prices are still warm in the country, even with the restrictive level of the monetary politic.
The Broad National Consumer Price Index (IPCA), which measures official inflation in the country,, in the largest advance for the month since 2003, according to the historical series of the Brazilian Institute of Geography and Statistics (IBGE).
In the last twelve months, the rate was 5.06%, above.
The UBS sees the scenario with a harder tone, betting on a renewal on the high of a point for the May meeting.
“If the committee chooses to slow down the rhythm at its May meeting, we believe the market would realize the Central Bank as more lenient in relation to inflation, which could further decrease expectations and lead to higher and real reais,” the bank pointed out.
On the other hand, Suno Research sees good news when looking deeply to the February data.
“After months of unfavorable qualitative data, some numbers came more benign, especially for the most monitored groups by the Central Bank. The diffusion rate, which measures the spread of inflation in the economy, retreated for the second consecutive month, ”said Gustavo Sung.
“Another positive point was the slowdown in the rhythm of high prices in January to February of underlying services, intensive labor and average services -possibly reflecting the scenario of slowing economic activity -as well as industrial goods.”
Still, the economist stressed that, despite a certain relief in February, many rates still remain well above the upper limit of 4.5% inflation target and that.
In February, BC President Gabriel Galipolo said that families and companies should go through a “uncomfortable” moment. In addition, he pointed out that prices should only be controlled after.
Economic activity
In its last meetings, Copom has pointed to as one of the main concerns about inflation.
In 2024, the Brazilian Gross Domestic Product (GDP) accelerated and closed the year with. What economists point, however, is for one.
Although an initial slowdown has been noted from the third to the fourth quarter of last year, the market sees no room for a possible interest cut, which would be dependent on the relationship between the fiscal and inflationary scenario.
“Regarding future cuts, our inflation scenario remaining above the target longer will not probably not allow the BCB to cut this year, although we expect a weaker economic activity. If the fiscal scenario does not deteriorate further, there may be cut cuts in early 2026, ”said UBS.
The bank points to the possibility, in this and next year, a scenario of stagflation – when retraction of economic activity and high prices combine.
With this, Deutsche Bank sees a scenario similar to the one faced by the country during the recession of 2015 and 2016, and reinforces fears of public accounts neutralize the effects of monetary policy.
The German bank highlighted, above all, as additional pressures to inflation credit stimulation measures – such as – and a, to exempt.
“Inflation has shown clear signs of tax dominance, suggesting that it can remain close to these levels or higher until the 2026 elections. […] We see inclined risks for more tightening than priced. […] Inflation has become more inertial and fiscal by nature, and can remain raised or rise even more, as in 2014-16, ”he said.
From May onwards
For the May meeting, expectations are divided as to the pace that Copom should rise interest. But, according to BC expectations in the Focus Bulletin, Selic should rise 0.5 point in the third meeting of the year and 0.25 on Wednesday, parking at 15% by the beginning of 2026.
