The Brazilian central bank’s 75bp hike in the Selic rate (to 2.75%) and hawkish statement point to a front-loaded tightening cycle in the coming months. We now expect a further 200bp of hikes (to 4.75%) over the next three meetings. But we think the cycle will draw to a close by the end of Q3 as inflation starts to fall back. Most expect that the central bank will continue to tighten going into 2022.
Note: Chief Emerging Markets Economist William Jackson and Senior Emerging Markets Economist Jason Tuvey will be discussing the outlook for monetary policy in Brazil, Turkey and the rest of the emerging world today at 14.00 GMT. If you haven’t done so already, register here.
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