Brazil Sticks on Rates, As Expected

As expected, Brazil’s central bank has kept its monetary policy rate on hold at 8.75%, but may begin tightening soon. “We believe that . . . Copom is preparing the markets for a tightening cycle in April,” says Goldman Sachs. The shop adds that Copom will raise the rate by 375bp to 12.50% this year. “The first hike would amount to 50bp in April, followed by 3 increases of 75bp per meeting, concluding with two final hikes of 50bp per meeting,” says Goldman. Bulltick meanwhile believes Brazil may tighten 150bp by the end of the year, starting in Q2. Standard Chartered sees a first hike of 50bp in March.