Forecast of the Central Bank of Brazil: a rise in interest rates of 100 basic points at 13.25% is planned

• The Central Bank of Brazil will announce its monetary policy decision today Wednesday at 9:00 p.m.
• The entity is expected to raise interest rates 100 basic points.
• The Central Bank premieres president at the first meeting of 2025.
• The Brazilian real could experience volatility with the announcement, which occurs a couple of hours after the Fed rates decision.

The Central Bank of Brazil will announce on Wednesday at 9:00 p.m. its monetary policy decision. The market awaits an increase in interest rates of 100 basic points (PB), which would place the types at 13.25% from the current 12.25%.

The Central Bank of Brazil can raise interest rates at its highest level since August 2023

The Brazilian Central Bank has uploaded its rates in the last three meetings. In September, 25 PB raised up to 10.75%, in November 50 bp up to 11.25% and in December it opted for an increase of 100 bp to 12.25%.

The market consensus expects Brazil to increase its types again by 100 basic points, taking them to 13.25%, a level not seen since August 2023.

Gabriel Galipolo premieres as the new president of the Central Bank of Brazil

The first monetary policy meeting of the Central Bank of Brazil will be chaired by Gabriel Galipolo, new president of the entity until 2028, and appointed by Luda da Silva replacing Roberto Campos Net.

Galipolo knows the entity well, since it has been its director of monetary policy in the last period, and is known for its proximity to Lula, of which he was an economic advisor during the 2022 electoral campaign.

According to Bloomberge Economics, “Galipolo will want to generate consensus at the beginning of his mandate. The two members of the Board of Directors who were not appointed by Lula, supported the orientation of an increase of 100 basic points in January. We hope they comply. The three members who joined In January they have few incentives to disagree, since they begin to generate credentials to combat inflation. ”

How would it affect a climb of 100 bp to the Real Brazilian?

A strong decrease in the Brazilian real is not expected if the Central Bank of Brazil announces an increase of 100 basic points in interest rates, since the decision may already be discounted from the price. In the event that the increase is 50 bp or 75 bp, we could see a rebound in the Brazilian currency, since the entity’s position would be less aggressive than expected.

The general trend of the USD/BRL is bassist in the short and medium -term temporary frames, although it maintains the bullish bias in long -term graphics. A rise in the torque will find resistance this week in 5,9552. Above the psychological zone of 6,000 waiting. It is necessary to break above this level to search for a 2025 roof test registered on January 2 in 6,2271.

In case of going down, the first important support waits in 5,8432, minimum of this Wednesday and the last two months. Below, the USD/BRL could slide to the 5,700 region and 5,6355, November 2024.