FXStreet (Córdoba) – According to the Research Department at BBVA, the decision on Wednesday from the Brazil Central Bank to leave rates unchanged signaled that the rate will likely remain at the current level for a long time.
Key Quotes:
“The decision follows the adoption of a more hawkish tone by the monetary authority for some time up to the beginning of this week, when in an unusual comment the President Tombini regarded the IMF’s downward revision of Brazil’s growth forecasts (to -3.5% in 2016 and 0.0% in 2017) as “significant”, changing the previous guidance.”
“The Selic rate will likely remain unchanged for some further time. Therefore, after signaling for some time that a monetary tightening was imminent, the Copom ended up focusing on the negative economic and likely also political effects of a further dose of monetary tightening in the actual context and leaving the Selic rate unchanged, as we expected.”
“Taking that into account, the most likely is that the Selic rate will be left unchanged at 14.25% for some time going forward. Anyway, by highlighting “external uncertainties” the Copom suggested that the developments in China, commodity and financial markets will be more closely followed from now on, meaning that their evolution could shape future monetary policy decisions.”
(Market News Provided by FXstreet)