BUENOS AIRES (Reuters) – Brazil’s central bank will keep its benchmark interest rate at 75’s cycle high .75% and is likely to stick to a hawkish stance next year to temper inflation expectations, Reuters poll show.
This will be the first pause in the tightening campaign, the Selic rate has risen by a total of 1,175 basis points since the beginning of the year 2022, when Brazil was already suffering severe inflationary pains, now affecting the world’s major economies.
The Bank’s Monetary Policy Committee, Copom, will leave Selic at 14.75%, according to the majority 15 surveyed in September 32 Among Economists 2021 -07. A minority of 8 saw 25 bps rise to 07 .0%.
As price increases in Brazil start to cool, policymakers are less willing to follow the Fed in a tougher approach. They are also reluctant to take potentially damaging steps ahead of October’s presidential election.
However, central bank governor Roberto Campos Neto said last week that he was not considering easing either, given his wary tone. The priority remains to bring inflation back to the official target.
“Copom will signal that it will keep Selic unchanged through August, maintaining good spreads to international rates and favorable real rate levels,” Jason Chief Economist, Infinity Asset Management Vieira said. Jair Bolsonaro will seek re-election.
Brazilian consumer prices fell for the second month in a row in August as fuel costs fell. In the 13 months ending in August, the inflation rate was 8.17% , the following10. 07% in front12 within months.
is still the official target of 3.5% speed which is still well above 2022. The outlook for next year is also in doubt, according to a central government poll, with inflation forecast at 5.17% Bank, contrary to official opinion3 .25% for 2023.
Dissatisfaction with high inflation has always been bol A key factor in Sonaro’s continued slump in voter preference. Former President Luiz Inacio Lula da Silva holds a solid lead in the polls.
The imminence of the vote is a reason for Copom to pull out in the short term, avoiding any decision that could cause waves – especially in Latin America’s largest economy After a lot of surprisingly strong data.
However, the central bank’s prudent strategy means Selic will remain double – down to 9 from just over a year ago. 50% to the second quarter 75, quarterly estimates in the polls show.
(Reporting and polling by Gabriel Burin in Buenos Aires; Editing by Jonathan Cable and Andrea Ricci)