Research Team at TDS, notes that the BCB kept its policy rate on hold at 14.25%, with two dissents for a 50bp hike maintained, as we had expected. Key Quotes “The only change in the terse statement was the removal of “increase” in the phrase “..considering the increase of domestic uncertainties” in the justification of the policy decision. This is a very minor change, but represents and ever so slightly less hawkish policy bias. The market has been positioned to expect a BCB on hold, and the slightly less concerned sounding BCB may bring a margin of market players in to bet on a rate cut later this year (we see a 50bp cut in Q4). Brazil releases Q4 GDP data today and is expected to post its 4th consecutive quarter of contraction, and so the market should not be too apt to trade on what is expected to be a -1.6% Q/Q print. MXN: Banxico will release its inflation report, which will be interesting in the sense that the surprise policy decision to hike rates was predicated on the risk posed to inflation by a weak MXN, despite little evidence of inflationary pressures or risks to inflation expectations.” For more information, read our latest forex news.