* Brazil’s central bank (BCB) has released the minutes from the latest meeting of its monetary policy committee (Copom), held last week, and during which the benchmark interest rate (Selic) was raised to 9.25%. The Copom has said that
“given the increase in its inflation projections and in the risk of de-anchoring long-term expectations, it is appropriate to advance the process of monetary tightening significantly into the restrictive territory”, indicating that another 150 basis-point hike to the Selic is likely at its next meeting. The Copom notes that consumer inflation is high and that inflation targets are currently out of reach. While conceding that a decrease in international commodities prices could produce lower-than-expected inflation, the Copom sees the possibility of the government extending fiscal responses to the coronavirus (Covid-19) pandemic further as a risk to inflation, compounded by uncertainty over
“the future of the current fiscal framework”.
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