Brazil Central Bank unexpectedly holds rates - TDS

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 21, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    FXStreet (Bali) - Sacha Tihanyi, Senior EM Strategists at TDS, notes that Brazil Central Bank sent the worst possible signal to markets by surprisingly holding rates unchanged, risking loss of credibility.

    Key Quotes

    "The BCB decided to hold rates, against our call for a 50bp hike, and against the bias of consensus; 3/4ths of Bloomberg’s surveyed analysts saw at least a 25bp hike."

    "The vote was once again split 6-2 in favour of no change, with the two dissenters calling for a 50bp rate increase."

    "We feel that this move exposes BRL to some degree, and will raise questions as to the credibility of the central bank in achieving its inflation goals considering the development in inflation momentum, and the underlying inflation trend."
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