The statement from the Monetary Policy Committee (Copom) on Wednesday night, with no news regarding the Central Bank’s view on the inflation scenario, leaves no room for greater adjustments in the Brazilian interest curve on Thursday, according to economists heard by Reuters.
During the afternoon, some professionals were already treating this Wednesday’s Copom decision as a kind of “non-event”, since the expectation was that the collegiate would cut the basic Selic rate by 50 basis points, to 11.25 % per year, and maintained the general lines of previous communications. That is what happened.
“Copom practically did a ‘copy and paste’ of the previous statement. There is nothing that makes us think about changing course: there will be a 50 basis point cut in the next two meetings”, pointed out the chief economist at Bmg bank, Flavio Serrano.
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With expectations still unmoored, Copom chose to remain cautious, economists say
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“And there is nothing in the statement that could change the dynamics in the interest rate curve. So, this Thursday we are at the mercy of new data, or some correction out there,” she added.
The chief economist at SulAmérica Investimentos, Natalie Victal, made a similar assessment.
“It was practically a ‘copy and paste’, just with some adjustments. Everything was very much in line with expectations”, said Victal. “For Brazil, we should not have major movements in the market motivated by the BC. What will dictate the direction of the markets will be abroad,” he added.
Fernando Bergallo, CEO of FB Capital, also pointed out that the Copom has little power to move the market in this session.
In this sense, the Federal Reserve’s monetary policy decision, announced a few hours before that of the Central Bank of Brazil, has greater potential to conduct business with DIs (Interbank Deposits) and the dollar in Brazil, this Thursday, than the Copom itself .
This is because the Fed’s message gave strength to the view that interest rates should start to fall in the United States in May — and not in March, as had been widely priced. Some statements by Fed Chair Jerome Powell were in this direction, but Treasury yields still ended the session low. In Brazil, DI rates followed suit.
The fall in yields this Wednesday was linked to weaker than expected economic data in the US, but there is also the perception that Powell and the Fed have not completely closed the door on an interest rate cut in March. Adjustments to the North American interest curve are not ruled out this Thursday, which could also impact the Brazilian market.