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Analysts at TD Securities suggests that the BCB will be rock steady at 6.50 today as the underlying inflation trends are nowhere near suggestive that the BCB should be hurrying to hike rates.

Key Quotes

“Inflationary effects of the trucker’s strike seems to have faded away and there is little if any pass-through on tradable or headline inflation, hence it will be difficult for the BCB to see reason to raise rates on the back of inflation.”

“Nonetheless, market is pricing in the risk of a 25bp hike this week and more or less 50bps a meeting over the coming meetings. The market continues to price in too little a risk that rates remain on hold for at least another 5 months, making shorter-term rates (and BRL) look attractive, though political uncertainty remains a notable risk factor.”

Expert score

5

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