The next big move in Brazilian rates will be down

The Brazilian Central Bank (BCB) hiked interest rates by 25bps to 12.50% last night. The tone of the accompanying statement suggests that rates may now have peaked, although we wouldn’t rule out another 25bps increase at the next meeting. Either way, the key point is that the bulk of the tightening is now out of the way and rates will probably stay on hold for the bulk of next year. What’s more, we think that the next big move in interest rates will be down.