Brazil – The BCB is not done tightening

Banco Central do Brasil (BCB) releases the minutes of the 3 June COPOM meeting on 11 June. The minutes are expected to continue beating the hawkish drum. 

Last week's post-meeting statement was virtually identical to the previous meeting's, reaffirming the BCB's hawkish policy stance and fuelling expectations that another 50bps hike in the SELIC rate at the 29 July COPOM is in the offing. 

Short-dated rates futures have fully priced in a 25bps hike in July and are increasingly pricing in risks of another 50bps hike. 

Recent BCB commentary has focused on anchoring inflation expectations for 2016 as the priority, despite weak recent economic data. This seems consistent with its intent to reclaim policy credibility on its inflation targets at the expense of exacerbating the recession in 2015.