Financial market has already begun to adjust its predictions, pointing to the possibility that the increase cycle will end in June
The monetary policy committee () has signaled that unless significant changes in the economic scenario occur, the institution intends to slow down the increase in May. After three consecutive meetings raising the rate to 1 percentage point, Copom warned last Wednesday (19) that the next adjustment does not exceed 0.75 percentage point, indicating that the high cycle may be approaching the end.
The financial market has already begun to adjust its predictions, pointing to the possibility that the Selic increase cycle will end in June. Although Copom did not commit to making the last increase in May, the concern with the discouragement of expectations and the high uncertainty were highlighted. However, the resilience of economic activity, even in a slowdown scenario, was recognized.
Financial institutions, such as BMG and BNP Paribas, project that Selic may suffer another increase, reaching between 15% and 15.25% until June. With the experience of those who have been to Copom, Itaú Unibanco chief economist Mario Mesquita noted that mentions of monetary policy occur historically before the end of the adjustment cycle. He ponders that this does not suggest that the Copom “necessarily interrupts the monetary tightening.” In May 2022, the Copom mentioned the lags in the minutes of his meeting and yet made two more increases of 50 base points.
Itaú’s forecast, as well as banks economists such as Bank of America, Barclays, Daycoval and BTG Pactual, is that Selic will rise twice and reaches 15.25%.
*Report produced with the aid of AI and Estadão Content
Posted by Fernando Dias
