Scenario evolution had a bullish impact on our currency, interest rate, and inflation forecasts (Aug 9)
The Copom minutes had a tougher tone, counterbalancing the market’s dovish view regarding the statement, and Director Galípolo—who is expected to become the president of the BCB next year—emphasized the institution’s commitment, resulting in significant currency appreciation. This set of factors led to a 4% appreciation in the BRL, compared to the previous week’s closing, solidifying our view that the Brazilian currency should close 2024 at R$/US$ 5.50 (versus our previous base scenario of R$/US$ 5.40). For 2025, the revision kept the same magnitude—from R$/US$ 5.30 to R$/US$ 5.40.
Additionally, we also revised our base scenario for the terminal Selic rate in 2025—from 10.00% to 10.50%—also considering the July IPCA result. Consequently, we revised our consumer inflation scenario for 2024 and 2025, from 4.4% to 4.5% and from 3.7% to 3.8%, respectively.
Finally, it is worth noting the significant movements in U.S. assets this week, given the fear of a recession in the U.S. Today, several metrics point to a possible recessionary scenario in the United States, but we believe that a soft landing still holds the majority chance, considering the available information and the post-pandemic context.
For more information, please check our Weekly Report 76.
