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September 16, 2024
As expected, the ECB cut interest rates by 25 basis points, as inflation improves and medium-term risks diminish. Christine Lagarde dropped no hints regarding possible future decisions, as per the central bank’s recent policy of taking action meeting by meeting, based on hard data.
July 18, 2024
As expected, the ECB leaves its monetary policy unchanged and leaves the door open for a rate cut at the next meeting in September, awaiting for more data on wages, profit margins and productivity that confirm its inflation outlook.
June 6, 2024
No major news has come out today as the rate cut was universally expected and the ECB does not want to pre-commit to the path of future cuts. We still expect two further cuts this year, in September and December, if there are no major surprises in the outlook for inflation during the rest of the year.
April 11, 2024
All in all, while waiting for wage data that underpin the expected slowdown in service prices, the ECB heads to the June meeting leaving the stage set to begin the cycle of cuts, regardless of the Fed's monetary policy steps.
September 9, 2021
As expected, the ECB announced a moderate slower pace of net asset purchases under the PEPP for next quarter, as compared to that in the previous two quarters. The decision was taken by unanimity by the Governing council on the back of favourable financing conditions and slightly better inflation outlook
March 10, 2016
Even though inflation forecasts were revised upwards, the tone of the monetary policy minutes was not hawkish. The Copom refrained from signalling that either a tightening or an easing of monetary conditions is imminent. Hence, the minutes reinforced the view that the Selic rate will remain unchanged for some further time (until the end of 2016, in our opinion).
March 3, 2016
The Monetary Policy Committee (Copom) decided to leave the Selic rate at 14.25%. The fact that two members of the Committee favored a 50bp hike and the lack of changes in the communique suggest that an eventual easing of monetary conditions is not imminent.
January 28, 2016
The minutes of last week's monetary policy meeting show that Copom is now more concerned about the evolution of the Chinese economy and oil markets, which "can strengthen the scenario of convergence of inflation to the 4.5% target in 2017". The more dovish tone used by the monetary authority supports our view that the Selic will remain unchanged for some further time.
January 21, 2016
In line with our view, but in contrast with the market consensus, the Copom decided to keep interest rates unchanged in an environment marked by political pressure against a further monetary tightening, the worsening of the prospects for economic activity and "domestic and mainly external uncertainties". Looking forward, the Selic will likely remain stable for some time.
December 3, 2015
The COPOM suggested that it will increase interest rates if the fiscal situation deteriorates further, which is more likely now after the launching of the impeachment process of President Rousseff. Anyway, our base scenario is for a stable Selic ahead, which was supported by the COPOM's forecast of inflation around the target in 2017, the monetary policy relevant horizon.
May 7, 2015
The minutes of last week's monetary policy meeting suggest that the tightening cycle is not over yet. According to the COPOM, the efforts to drive inflation down to 4.5% by the end of 2016 are "still not sufficient" and therefore monetary policy must remain "vigilant". We take today's minutes as a sign that the SELIC will be adjusted by 50bp to 13.75% in June.
April 30, 2015
The Monetary Policy Committee (COPOM) decided to adjust up the SELIC rate by 50bp, as in its three previous meetings. By maintaining the adjustment pace unchanged in spite of the signs of sharp deceleration in economic activity, the monetary authority tries to convince markets that it will be able to make inflation to converge to 4.5% at the end of 2016.
