COPOM Decision: Giving with one Hand and Taking Back with the other

BRAZIL ECONOMICS - Report 08 Dec 2014 by Affonso Pastore, Cristina Pinotti and Marcelo Gazzano

In its first meeting since the presidential election, the Monetary Policy Committee (COPOM) started a tightening cycle. It justified the decision (which was not unanimous) by stating that it was due to the inflationary effects coming from the “intensification of the adjustments or relative prices in the economy” – which can be interpreted as the intensification of the effects of the weakening exchange rate. Contrary to the consensus expectations at that point, it raised the SELIC rate to 11.25% a year, an increase of basis points. The Central Bank took this decision against a backdrop of the exchange rate nearing R$ 2.50/US$, with depreciation of 5% in the past month (Graph 1), and shortly beforehand the IBGE had announced that the IPCA for September had increased by 0.57%, bringing the 12-month consumer inflation rate to 6.75%.

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.