The Copom minutes confirmed our scenario for the Selic rate but impacts from RS changed our growth and inflation forecasts (05/17)
The Central Bank’s tougher tone in the minutes eased last week’s risk aversion when Copom significantly dissented on the 25 basis point rate cut. We anticipate another 0.25 percentage point cut in the next decision, although the guidance was unanimously withdrawn.
For the 2024 GDP, we reduced our forecast from 2.1% to 1.9%, following the atypical rains in Rio Grande do Sul. We also raised our forecast for home food costs from 3.8% to 4.6% this year. Nevertheless, we maintained our expectation of 3.8% for this year’s IPCA, as we removed a gasoline price hike from the base scenario.
Lastly, attention to the recent U.S. data showing activity slowdown, which contributed to the perspective of inflation converging to the target. However, we condition our expectation on the data of the coming months, which will indicate if this trend will be established. For now, we continue to foresee unchanged Fed Funds in 2024.
For more information, please check our Weekly Report 64.
