Brazil Hikes, Colombia Holds

Brazilian officials decided unanimously to raise the country’s benchmark interest rate 50bp to 10.00%, while Colombian officials were also unanimous in a vote to hold theirs at 3.25%. Brazil’s move was expected, with analysts expecting a slowing at the next meeting in January. Several shops noted a change in the bank’s message, which had been consistent through the previous meetings. “With today’s policy statement changes, the Copom left the door open to taper the pace of rate hikes from 50bp to 25bp, but the statement falls short of indicating whether the central bank is planning, or under what conditions, it plans to decelerate the pace of rate hikes,” Goldman Sachs says. The shop sees a 25bp hike in January, noting that the move will depend on data including inflation and the fx rate. “The Copom changed the text to signal, in our view, that the end of the tightening cycle is near,” says Itau, another calling for a 25p hike in January.