The compass, the map and the fog
We believe that the reading of the most recent edition of the Copom Minutes was dominated by one single question: will the easing cycle, pardon, the calibration of the Selic continue, or will the BC be forced to end it, or pause it, after only modest two cuts of 0.25 p.p. each?
Our understanding is that the Committee will most likely continue the process, despite the evident tightening of the language compared to the previous edition of the document, at least in June, although the scenario has become even more nebulous compared to that observed at the previous meeting.
The additional opacity derives, as would be expected, from the effects of the conflict in the Middle East on the price of oil and its derivatives and the consequent impacts on supply chains. Although absent from the Minutes themselves, we can also add to this picture the effects on the global supply of fertilizers, therefore on food prices ahead.
The issue, however, is not limited to the increase in uncertainty, although this is an important problem.
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