See what Copom is going to do now, according to 4 economists

central bank
Crystal ball: market tries to anticipate how the Central Bank will untie the knot of inflation with economic stagnation (Image: Leonardo Sá/Agência Senado)

Most of the market already expected an increase of 1.5 percentage points in the Selic, as decided on Wednesday (8) by the Copom (Monetary Policy Committee) of the Central Bank. Thus, the fact that the benchmark interest rate is now at 9.25% a year does not surprise anyone.

What analysts scrutinize with a magnifying glass now are clues about the BC’s next steps. For some economists and strategists, the statement released today shows the Copom’s willingness to go even harder in fighting inflation, so that market expectations converge again towards the target. It is the well-known concern with anchoring expectations.

For others, the Copom is excessively concerned about rising prices, and ignores trends that should ease inflationary pressure in coming months.

Check out what analysts and economists expect from the Copom in the coming months.

Keeping an eye on 2023

“The Copom will strive to control inflation expectations, which are unanchored until 2023, at this time, despite the fall in fiscal risk premiums, with the approval of the PEC dos Precatórios, and the prospect of a prolonged recession. We should see the Selic rate at high levels for a considerable time, at least until the end of the first half of 2022. For now, we anticipate a new increase of 1.50% at the next meeting and another 1% increase at the March meeting, making the Selic rate ends the cycle and 2022 at 11.75%.”
(Nicolas Borsoi, chief economist at Nova Futura Investimentos)

deaf ears

“The communiqué recognizes some improvements in the scenario, such as the price of commodities and public accounts. But it fails to mention energy prices, which can also contribute positively as water risk dissipates. In the same way that COPOM ignored short-term noise when inflation was rising, this time, even with more positive data, the Central Bank still sees it as incipient and prefers more observation time before taking new decisions.”
(João Beck, economist and partner at BRA)

caution in dose

“It wouldn’t make sense to increase more than that, since, even in the face of an inflationary scenario, there are data of economic stagnation. Therefore, it was the best decision to repeat the 1.5 percentage point increase from the last Copom meeting.”
(Gustavo Bertotti, head of Variable Income at Messem Investimentos)

No option

“The rise in interest rates is a bitter medicine to put the economy back on track right now. Even if the country is in technical recession, as pointed out in the release of the GDP for the third quarter, raising the Selic is the main alternative that the Central Bank has at hand to try to control inflation.”
(Evaldo Perussolo, CFO of Banco Bari)

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