巴黎银行-新兴市场-宏观策略-巴西货币政策：不急于加息-20181212-7页_588kb

Brazil Monetary Policy Summary

Core Content

The document discusses the recent monetary policy decision by the Brazilian Central Bank (BCB) and its implications for the economy and financial markets. It highlights that the BCB decided to keep the Selic rate unchanged at 6.5% for the sixth consecutive time, as expected by market participants. This decision reflects the central bank's assessment of the current economic environment and its stance on inflation control.

Key Points

• Interest Rate Decision: The BCB maintained the Selic rate at 6.5%, signaling a cautious approach to monetary tightening.
• Inflation Outlook: According to the BCB's models, inflation is projected to be 3.6% by the end of 2020, which is below the 4.0% target, even under the current Selic rate and USD/BRL exchange rate assumptions.
• Balance of Risks: The post-meeting statement noted improvements in the inflation risk balance. Specifically:
  • The risk of a negative output gap keeping inflation below target has decreased.
  • The risk of delaying necessary economic reforms has also improved.
• Next Policy Meeting: The next meeting is scheduled for 5 February 2019, and it is likely to be chaired by Mr. Goldfajn.
• Market Reaction: The decision is seen as more dovish, which may lead to increased focus on longer-term bonds such as the NTN-F 2023.
• Future Events: Market participants are advised to monitor the release of the meeting minutes (18 December) and the quarterly inflation report (20 December) for further insights.
• New Governor: The next central bank governor, Mr. Campos Neto, is expected to take office in March 2019, and his influence on future policy decisions will be a key point of observation.

Trade Idea

The strategy team recommends maintaining a long position on NTN-F 2023, as the longer tenors are expected to show more performance potential given the current low-interest-rate environment. The document suggests that while the shorter-term yields may have room for compression, the longer-term instruments are more likely to reflect the central bank's policy stance.

Legal and Regulatory Disclosures

• Non-Independent Research: The document is classified as non-independent research under MiFID II and is intended for Relevant Persons.
• Conflicts of Interest: BNPP may have financial interests in the securities or entities mentioned and may engage in transactions that are not aligned with the views expressed in the report.
• Marketing Communication: This is a marketing communication and not investment research. It is not intended to be relied upon for making investment decisions.
• Confidentiality: The information provided is for internal use only and may not be distributed without prior written consent.
• Jurisdictional Restrictions: The document contains information that may not be eligible for sale in all jurisdictions or to certain investors. It also includes disclosures related to options, ETFs, and convertible securities, noting their risks and regulatory status.
• Regulatory Bodies: The report is distributed by various BNPP entities in different jurisdictions, each under the supervision of relevant regulatory authorities such as the ECB, ACPR, BaFin, AFM, and others.

Conclusion

The BCB's decision to keep interest rates unchanged reflects a cautious and data-driven approach to monetary policy, emphasizing the need for further economic reforms and a more favorable inflation outlook. The report provides insights into the policy stance, market implications, and regulatory context, while clearly outlining the non-investment advice nature of the content. Investors are advised to consult with professional advisors and carefully consider the risks and limitations of the information provided.