The attention of the financial market turns, this Tuesday (5), to the publication of the minutes of the last meeting of the Copom (Monetary Policy Committee) of the BC (Central Bank).
The expectation is that the document will reinforce the cautious tone adopted in last week’s interest rate decision in the face of a scenario marked by external uncertainties and persistent inflationary pressures, according to an assessment by economists and financial institutions consulted by the CNN Money.
“It should reiterate the tone of the statement by emphasizing the need for ‘serenity and caution’ in conducting monetary policy, in an environment of high uncertainty associated with the conflict in the Middle East”, highlights a report from Banco do Brasil’s economic advisory team.
“The document should reinforce the possibility of adjustments in the ‘pace and extent’ of the calibration of monetary policy, preserving flexibility for the Committee to react to the evolution of the scenario and the incorporation of new information on the economic and inflationary impacts of the war”, he points out.
It was a detail about a word that caught the market’s attention in the Copom statement: the addition of the word “extension”.
By communicating, a decision that took it to the level of 14.5% per year, the board sent the market a message that it can review how long the interest rate cut cycle will last, which means the end of this movement sooner than expected and higher interest rates for longer than expected.
However, after the announcement, . In the Focus bulletin, through which the BC calculates market expectations weekly, the median for interest rates still remains the same, but .
Before deeper revisions, some investors await further clarification in the minutes about what was said in relation to the extension of the cutting cycle, .
The predominant reading in the market is that the monetary authority continues in a “calibration” process, but with greater concern regarding the inflationary environment, as indicated by Natalie Victal, chief economist at SulAmérica Investimentos.
“It is worth noting that this projection may be revised with the release of the minutes, which will inform us better regarding the BC’s reaction function”, wrote the analyst when reviewing the estimates for the house’s terminal Selic of 13% to 14% in 2026.
Luis Felipe Vital, chief Macro and Public Debt strategist at Warren Investimentos, highlights that reading the minutes should focus on three key points.
“First, the Copom’s more qualitative assessment on the distance of inflation projections in relation to the center of the target and on signs of a resumption of economic activity observed in recent months”, indicates Vital.
“Second, possible signs of concern about an additional process of unanchoring inflation expectations.”
Finally, he emphasizes that the market will seek to understand whether there was discussion about the possibility of interrupting the interest rate “calibration” process and, mainly, how the Copom is evaluating the “extension” of the cycle.
