Copom opts for smaller hike, but keeps hawkish stance

Brazil’s central bank slowed the pace of its hiking cycle with a 100bp hike (to 11.75%) yesterday, but the hawkish tone of the statement suggests that Copom is more concerned about the coming jump in fuel inflation than we had thought. As a result, we have tweaked our forecast for the Selic rate and now expect it to peak at 13.50% in June (previously 13.00%).

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