From: Daniel Sabba cta To: [email protected] <[email protected]> CC: Vahe Stepanian Ariane Dwyer cta Subject: Fw: Faria: Brazil Daily Update Date: Thu, 05 Mar 2015 20:55:06 +0000 Classification: Public Brazil raised rates 50bps. An outlier economy... Since early 2015 we saw over 18 economies cutting rates globally. Original Message From: Isin Sumengen-Ziel (DEUTSCHE BANK AG, LO) [mailto Sent: Thursday, March 05, 2015 01:04 AM To: Daniel Sabba Subject: Faria: Brazil Daily Update Sent From Bloomberg Mobile MSG ---- Original Message ---- From: JOSE CARLOS FARIA, DEUTSCHE BANK S.A. B At: 3/4/2015 23:34 The COPOM raised the SELIC rate by 50bps to 12.75%, as expected The decision was unanimous and was in line with market expectations, as, despite the gloomy economic outlook, inflation remains significantly above the target and short-term inflation expectations continue to deteriorate due to the ongoing adjustment in administered prices (especially electricity). As we expected, the COPOM repeated the previous meeting's communiqué: "Assessing the macroeconomic scenario and the perspectives for inflation, the COPOM decided, unanimously, to raise the SELIC rate by 50bps to 12.75% per year, without bias." In our opinion, this statement does not signal anything for the next meeting, keeping the door open for another 50bp rate hike, a smaller 25bp hike, or no action at all. While we currently expect no further tightening, we must admit that the relentless pressure on the currency has increased the likelihood of another rate hike in April. The COPOM minutes to be published next Thursday could indicate whether the authorities are contemplating further tightening or not. Political crisis jeopardizes fiscal adjustment On Tuesday, Attorney General Rodrigo Janot submitted a request for the Supreme Court (STF) to indict 54 people, including congressmen and former congressmen, who allegedly benefitted from the Petrobras bribery scheme. The name