Brazil hikes rates, tightening cycle probably over

The decision by Brazil’s monetary policy committee (COPOM) to raise interest rates by another 50bp to 14.25% was largely expected, but the move to signal the end of the tightening cycle in the accompanying statement was less widely anticipated. Further hikes in the Selic now look unlikely, but the bigger picture is that rates will remain well into the double digits for the foreseeable future and the unwinding of the tightening cycle is unlikely to begin until the second half of next year at the earliest.