FXStreet (Edinburgh) – According to Strategist Kit Juckes at Societe Generale, the Brazilian central bank is expected to hike its benchmark rate to 14.25% at today’s meeting.
Key Quotes
“The most noteworthy event today though, won’t be in G10 but rather, in Brazil where a hike in the Selic rate to 14.25% is widely expected”.
“The BRL has been hit by a combination of poor growth, political graft, weak balance of payments and falling commodity prices, and the currency’s fall has been one (not the only) factor behind faster inflation. Hence the rate hike amidst weak growth”.
“If the FX market reacts by selling the currency with increased fervour (which is what our EM team expects) there’s a risk the real’s woes make more headlines and fuel the sense that an eventual Fed move can cause extended risk aversion. Which is a risk exacerbated, of course, by the fall in oil prices”.
(Market News Provided by FXstreet)