Explore the latest developments concerning Brazil's central bank.
Brazilian Real: LatAm policy paths and FX levels – Societe Generale
Societe Generale’s Emerging Markets (EM) strategists say the Brazilian central bank, Banco Central do Brasil (BCB) minutes support an easing cycle with pauses to guide inflation back to 3% by 1Q28, leaving USD/BRL approaching its 200‑day moving average at 5.25.
"In LatAm, minutes from the BCB meeting support our house view that the easing cycle will be interspersed with pauses to guide inflation back to the 3% target by 1Q28. "
"Policymakers signal a preference to track a path closer to market and analyst expectations to limit financial and macro volatility."
"That said, the minutes do not fully explain the decision to drop rates by 25bp last week despite signalling upside inflation risks. "
Brazil 10-Year Yield Eases After Copom Minutes
Brazil’s 10-year government bond yield edged down to 14.4% in late June after the release of the minutes from the latest Copom meeting, in which the benchmark Selic rate was cut by 25 basis points to 14.25% per year.
The view that Copom left the door open for further Selic cuts helped ease the Brazilian yield curve.
Still, the minutes struck a slightly more hawkish tone than the initial statement, explicitly describing the inflation risk balance as asymmetric and tilted to the upside.
Meanwhile, the US Federal Reserve adopted a more hawkish stance at its latest meeting, with policymakers signaling additional rate hikes by December.
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