Our view: Hawkish statement, though there was room for a tougher tone. Maintained a vigilant stance, not mentioning the need for a rate hike, but also not ruling out the possibility. Therefore, we keep our expectation of keeping the interest rate at the current level with a resumption of cuts in 2025.
Selic Rate: kept at 10.50%, as expected.
Voting Results: The decision was unanimous, also as expected.
External Scenario: Remained adverse, emphasizing the lesser synchronization of monetary policy cycles between countries.
Inflation: Mild tone in stating that “disinflation measured by the full IPCA has cooled,” given the recent dynamics of the overall index’s acceleration (along with more sensitive metrics).
BC Inflation Projection:
Reference Scenario: In the relevant horizon, encompassing the first quarter of 2026, projections in the reference scenario are at 3.4% (in line with our expectations), remaining “around the target.” For the calendar years 2024 and 2025, upward revisions to 4.2% (from 4.0% and in line with our expectations) and 3.6% (from 3.4%, in line with our expectations) respectively. It is worth noting that projections for administered prices stood at 5.0% for 2024 (up from 4.4%) and remained stable at 4.0% for 2025. Thus, the +20bps revision in the 2025 headline was in free prices.
Alternative Scenario (considering a constant Selic rate): In the relevant horizon, projections stand at 3.2% (below our expectations of 3.3%), falling short of a more hawkish signal. For the calendar years 2024 and 2025, upward revisions to 4.2% (from 4.0% and in line with our expectations) and 3.4% (from 3.1%, above our expectations of 3.3%) respectively.
Balance of Risks: Asymmetric.
Upside:
Unanchoring of expectations for a prolonged period.
Resilience of service inflation.
External and internal policy environment impacting inflation through the exchange rate, in line with our expectations of comments emphasizing the recent currency depreciation.
Downside:
Unchanged, with emphasis on the continued risk of a more pronounced global economic slowdown, which has not been confirmed by recent data.
Hawkish Highlights:
Inflationary impacts arising from market variable movements and inflation expectations, if persistent, corroborate the need for greater vigilance.
Asymmetric balance of risks.
Reinforces that there is additional concern among economic agents about the fiscal scenario, which has impacted asset prices and expectations.
Diligent monitoring and increased caution.
