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28 Jul 2015
Brazil could hike rates by 50 bp this week – Rabobank
FXStreet (Edinburgh) - Strategists at Rabobank see the Brazilian central bank hiking the SELIC rate to 14.25% at its meeting on Wednesday.
Key Quotes
“We expect the COPOM meeting on Wednesday 29th July to result in a sixth consecutive 50bp hike, taking the SELIC rate up to 14.25%. This would mark a total of 325bp of rate hikes since October of last year. Our base case scenario is that this will be the penultimate move in with a final 25bp hike to 14.50% likely to end the cycle”.
“Given the tough environment, both economic and political, we see increased risks of a split decision at Wednesday’s COPOM meeting as we saw back in October of last year when the hiking cycle began”.
“If a split decision is revealed then this will provide a strong signal that the cycle is nearing an end and would support our call for a final 25bp hike in September”.
“That said, the Bank is likely to move into data dependent mode and will leave the door open for further tightening if necessary”.
Key Quotes
“We expect the COPOM meeting on Wednesday 29th July to result in a sixth consecutive 50bp hike, taking the SELIC rate up to 14.25%. This would mark a total of 325bp of rate hikes since October of last year. Our base case scenario is that this will be the penultimate move in with a final 25bp hike to 14.50% likely to end the cycle”.
“Given the tough environment, both economic and political, we see increased risks of a split decision at Wednesday’s COPOM meeting as we saw back in October of last year when the hiking cycle began”.
“If a split decision is revealed then this will provide a strong signal that the cycle is nearing an end and would support our call for a final 25bp hike in September”.
“That said, the Bank is likely to move into data dependent mode and will leave the door open for further tightening if necessary”.