By Gabriel Burin
BUENOS AIRES (Reuters) – Brazil’s central bank will hike its benchmark interest rate to a near decade-high of 14.25% on March 19, giving little extra forward guidance amid a changing outlook, a Reuters poll showed.
The bank’s monetary policy committee, known as Copom, is widely expected to raise the Selic rate by 100 basis points, delivering the third consecutive increase of that size in the current tightening cycle.
Under recently appointed governor Gabriel Galipolo, Banco Central do Brasil (BCB) has maintained a tough stance against resurgent inflation, in parallel to a battery of government measures to combat worrying trends.
However, contrary to the latest adjustments the bank had clearly indicated, next week’s policy statement will likely offer few hints of the path ahead, given increasingly mixed economic news.
Copom will raise the Selic by one percentage point to 14.25% at its March 19 meeting, its highest since a similar 14.25% rate in September 2016, according to all 37 economists polled March 10-13.
“The central bank will indicate a slower pace of adjustment at the following meeting (in May), without committing to subsequent moves,” said Leonardo Costa, economist at Asa Investments.
Recent data have pointed to an ongoing economic slowdown that should help bring inflation – which ran at 5.06% last month, the fastest in more than a year – down later this year.
Meanwhile, U.S. President Donald Trump’s erratic tariff policy continues to add uncertainty – not only on the monetary side, but also on the bilateral trade front, where Brazil’s government is keeping its cool.
Nearly all analysts who responded to an extra question on BCB’s next move after this month’s decision, 20 of 22, saw another increase in May, after Copom’s April recess.
The remaining two called for a cut at different months in the second half of 2025. Of the 20 expecting a May increase, 12 forecast a half-percentage point move, seven a 75 basis point hike, and one a 100 basis point increase.
The Selic is forecast to peak at 15.25% in the third quarter, the highest since a similar 15.25% in June 2006. It is then forecast to start falling, ending 2025 at 15.00% and 2026 at 12.50%, according to median quarterly estimates in the poll.
“Although we don’t expect new guidance (on March 19), there should be some room for a possible future reduction in the pace of rate hikes,” wrote Gabriel Barros, chief economist and Johann Soares, economist at ARX Investimentos.
(Other stories from the Reuters global economic poll)
(Reporting and polling by Gabriel Burin in Buenos Aires; Editing by Ross Finley and Chizu Nomiyama)
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