Brazil leaves rates unchanged but further hikes possible in 2015

Brazil’s central bank (BCB) called a halt to its tightening cycle last night and now seems unlikely to make any changes in interest rates until after October’s presidential elections. However, it’s possible that policymakers might resume tightening once the elections are out of the way – particularly if the government opts to loosen the purse strings in the run-up to the vote. We’ve pencilled in a further 100bp increase in interest rates to 12.0% in the first quarter of 2015.