Brazil Copom minutes: The mindset of another hike

The Copom April meeting minutes released earlier today brought a more hawkish message than expected, which means the Copom is likely to hike the Selic rate in the next meeting by 25bp. 

The Copom would bring a fairly data-dependent stance to the minutes, but the reading of the document does not corroborate that. 

Instead, the minutes seem to show a board that continues to have concerns regarding the inflation trajectory, downplays the deterioration of the activity data and emphasizes that the monetary policy actions deployed hitherto are still not enough to guarantee the convergence of inflation to the mid-point of the target by the end of 2016.

As a final point, the Copom included in the minutes that monetary policy must be vigilant to guarantee the convergence of inflation to the target. The question is whether it will be a 25 or 50bp hike. From the minutes, both options are valid. 

"Considering the scope for a downside surprise for Copom on the growth front before the next meeting, we believe the likelihood of a 25bp increase is larger than a 50bp rise", Says Barclays