Monetary tightening continues at a faster pace, but it should soon come to an end

Summary

In its last meeting in 2014, the Monetary Policy Committee (COPOM) decided to hike the SELIC rate by 50bp to 11.75%. The move surprised part of the market -including us- which expected a 25bp increase, same pace as in the previous meeting. In spite of the faster pace, which we see as a move by the monetary authority to try to regain credibility in its fight against inflation and which is consistent with the more restrictive tone of fiscal policy expected from the beginning of 2015 onward, the communique of yesterday's decision signaled that the ongoing tightening cycle in the SELIC rate will not last much longer.

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