{"id":87046,"date":"2024-02-07T10:29:04","date_gmt":"2024-02-07T13:29:04","guid":{"rendered":"https:\/\/murray.adv.br\/?p=87046"},"modified":"2024-02-07T10:29:06","modified_gmt":"2024-02-07T13:29:06","slug":"minutes-show-policymakers-more-concerned-about-inflation-employment","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/minutes-show-policymakers-more-concerned-about-inflation-employment\/","title":{"rendered":"Minutes show policymakers more concerned about inflation, employment"},"content":{"rendered":"\n<h6 class=\"wp-block-heading has-text-align-center\"><em>Document has harder tone than announcement of decision<\/em><\/h6>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>02\/07\/2024 <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/s2-valorinternational.glbimg.com\/E1RMyu6LjspP7fHtOSN59IQDK1U=\/0x0:3840x2550\/924x0\/smart\/filters:strip_icc()\/i.s3.glbimg.com\/v1\/AUTH_37554604729d4b2f9f3eb9ad8a691345\/internal_photos\/bs\/2024\/0\/4\/5BbRiiRuKfAXE4hAuIGQ\/060224brasilprev18.jpg\" alt=\"Robson Pereira\" style=\"width:652px;height:auto\" \/><\/figure>\n<\/div>\n\n\n<p class=\"has-text-align-center\"><em>Robson Pereira\u00a0Gabriel Reis\/Valor<\/em><\/p>\n\n\n\n<p>The Central Bank\u2019s Monetary Policy Committee (COPOM) revealed that last week\u2019s decision was taken after \u201cmore in-depth\u201d discussions about the labor market and that services inflation deserved \u201cgreater scrutiny.\u201d With these factors added to the committee\u2019s assessment of a slowdown in activity, market participants saw policymakers more concerned about the economic situation, although there was no change to the scenario of another 50-basis-point cut in the Selic policy rate.<\/p>\n\n\n\n<p>At various points in the minutes, the COPOM indicated that the economic scenario had evolved in line with expectations. However, the committee saw the need to include more in-depth discussions in the document, especially on the labor market and services inflation.<\/p>\n\n\n\n<p>The recent increase in real incomes in the labor market data and the worse-than-expected results for underlying services inflation in recent IPCA readings\u2014Brazil\u2019s official inflation index\u2014have recently triggered a warning signal among market participants. Thus, according to the minutes, the COPOM also noted these items, which was reflected in market participants\u2019 sense of a cautious tone in the document.<\/p>\n\n\n\n<p>In recent weeks, signs of a domestic economy that is still very hot and the deterioration in the behavior of U.S. Treasuries, with rising rates, have led to a sharp adjustment in local interest rates. At one point, the market was pricing in a Selic rate close to 9.5% per year at the end of this year.<\/p>\n\n\n\n<p>\u201cWe saw the statement [of the decision] with a more neutral tone, and there was an expectation that the minutes would also come without any major news. However, we saw a more hawkish tone,\u201d said Robson Pereira, chief economist at Brasilprev. He notes that the COPOM maintained its forecast for the next moves, signaling a further 50-basis-point cut in the Selic, but made \u201cquite important\u201d changes in its assessment of the scenario for conducting monetary policy going forward.<\/p>\n\n\n\n<p>Mr. Pereira notes that the minutes brought to light the Central Bank\u2019s greater concern with the labor market and services inflation, and that the monetary authority reinforced that uncertainty is high. \u201cThe Central Bank signaled that there is a more intense debate about the heated labor market and the causes of services inflation, in addition to the impact of the global scenario. All this is presented in a context of uncertainty, but it is a coherent minute that shows a more concerned Central Bank.\u201d<\/p>\n\n\n\n<p>In its baseline scenario, Brasilprev projects the Selic rate at 9% per year at the end of this year and 8% in 2025. \u201cAt the moment, we don\u2019t see any asymmetry, but before today\u2019s [Tuesday\u2019s] minutes, we saw some asymmetry for [a Selic rate] a little below 9%,\u201d he said.<\/p>\n\n\n\n<p><a href=\"https:\/\/adclick.g.doubleclick.net\/pcs\/click?xai=AKAOjsvjD4_0zfqt9khVUwl3ypRVX6VRDDYw2dA9Ib06L-ZXGbhZHNW7-HvB8HJQQpWgljzaBcfleIgJ4G2wJArnnptKxvn8NX_Gh6rdjXY3-ZUa0NKzU-NrxzXqRWkhG1B8N2vagWVSSHNGmEznpJBw7s6H0pAZrt1rrFckunOXDN9KSmMd14NDY1mXlUOMha7Zoad75iK1GnuogVy63HyBi8MODHpKqUJsKnI-AwFDTQah0lDwwOeyDutXpD7W3fyP9G8vWLa7TAec6eEWpQQ0HZSKwDj5LEPeDKnw7tm3bTxOMro3ejWaqOmXXX9WaqsoBJoK_ydZJzfg8SL0Gjrgspaf9UUQOFOhr0sULNickBdTUcl3e4TUsucWH5bMi-WChdQ8oZlUVZxO9CkJPcwmZTL0rxclVDc8N2oWsbHKTyDI&amp;sai=AMfl-YSO528B8y1ge8ZGffj-cNmt-ScFggfW4ViOaLys8yZjZecmFoDWvo7qLSPLGgo2ZN4yD2XkpcESQw4wDOsIFvT0v_mi0Gbl-6Lj_m4lW8h2gXl8AXjOCRMKIU0wtq755nZ4EvXj&amp;sig=Cg0ArKJSzG4z94cvNURYEAE&amp;fbs_aeid=%5Bgw_fbsaeid%5D&amp;urlfix=1&amp;adurl=https:\/\/www.suzano.com.br\/%3Futm_source%3D%26utm_medium%3Dsocial%26utm_campaign%3D100-anos-alcan%26utm_content%3D2nd-party-Inter%26utm_term%3DLinkAd-970x500-valor-PARALLAX\" target=\"_blank\" rel=\"noreferrer noopener\"><\/a>In terms of inflation, the firm expects the IPCA to close the year at 4% per year, but the economist points out that it tends to decelerate further, which could eventually change something for interest rates as well. \u201cOf course, central banks make decisions looking further ahead, and for 2025 we believe that inflation will be very close to target. The minutes cite the Central Bank\u2019s projection of around 3.2%. That\u2019s a workable number. We\u2019re working with something close to 3%, but it\u2019s a gradual process and the risks are very high,\u201d Mr. Pereira said.<\/p>\n\n\n\n<p>Speaking at a BTG Pactual event on Tuesday, Central Bank President Roberto Campos Neto at times struck a similar tone to the minutes. He said, for example, that it is \u201cvery difficult to see a more sustained decline in inflation without a decline in services inflation.\u201d<\/p>\n\n\n\n<p>Mr. Campos also highlighted the significant fall in \u201cimplicit\u201d inflation, which is priced in by the market via the NTN-Bs (National Treasury notes), which was seen by the market as a more \u201cdovish\u201d signal and caused futures rates to fall on Tuesday. The January 2026 DI rate fell to 9.67% from 9.71%.<\/p>\n\n\n\n<p>For Rafael Cardoso, chief economist at Daycoval Asset, it\u2019s not possible to say that the minutes brought hawkish components than expected. \u201cWe believe that the Central Bank is explaining the reasons for its guidance, rather than adding new hawkish elements to the communication. The explanations are in line with what we have been following lately, and internally there is also a discussion about whether there is still an improvement in inflation on the near horizon,\u201d said the economist.<\/p>\n\n\n\n<p>Mr. Cardoso also notes that the COPOM\u2019s own inflation scenario has not changed. \u201cWe think the minutes are very neutral,\u201d he said. In his opinion, there is little room for further improvement in services inflation or goods prices.<\/p>\n\n\n\n<p>In Daycoval Asset\u2019s baseline scenario, the Central Bank should continue the current pace of 50-bp cuts, bringing the policy rate to 9% per year by the end of the year. \u201cWe also project a Selic of 8.5% in 2025, but we see risks that this level will be reached this year, depending on factors such as the external scenario and a slowdown in economic activity. Our call for the Selic to reach 9% in 2024 has a bearish bias,\u201d he concludes.<\/p>\n\n\n\n<p>*Por Victor Rezende, Gabriel Roca, Estev\u00e3o Taiar, Alex Ribeiro\u00a0\u2014 S\u00e3o Paulo and Bras\u00edlia<\/p>\n\n\n\n<p>Source: Valor International<\/p>\n\n\n\n<figure class=\"wp-block-embed\"><div class=\"wp-block-embed__wrapper\">\nhttps:\/\/valorinternational.globo.com\/\n<\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>Document has harder tone than announcement of decision 02\/07\/2024 Robson Pereira\u00a0Gabriel Reis\/Valor The Central Bank\u2019s Monetary Policy Committee (COPOM) revealed that last week\u2019s decision was taken after \u201cmore in-depth\u201d discussions about the labor market and that services inflation deserved \u201cgreater scrutiny.\u201d With these factors added to the committee\u2019s assessment of a slowdown in activity, market [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8106],"tags":[24590],"class_list":["post-87046","post","type-post","status-publish","format-standard","hentry","category-murray-news","tag-policymakers-concerned-about-inflation"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.0 - 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