MNI BCB Review – Dec 25: Hawkish Copom Pushes Back on Jan Cut

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Executive Summary

• The Copom decided unanimously to keep the Selic rate unchanged at 15.00% for a fourth consecutive meeting, as expected.
• The statement continued to strike a hawkish tone, however, and notably the committee did not offer any signs that it is considering a start to the easing cycle at the next meeting in January. Instead, it sees keeping the Selic rate at current levels for a very prolonged period as appropriate to ensure the convergence of inflation to target.
• As a result, many analysts now expect the first cut to happen in March, possibly with a 50bp move, although some see scope for an even later start. To cut in January, the data would need to surprise meaningfully to the downside.