Forecast of the Central Bank of Brazil: a rise in interest rates of 100 basic points is expected

• The Central Bank of Brazil will announce its monetary policy decision on Wednesday between 9:00 p.m. and 21.30 GMT.
• The entity is expected to raise interest rates 100 basic points to 14.25%.
• The Brazilian real reaches maximum of four months and could experience volatility with the announcement, which occurs three hours after the Fed rates decision.

The Central Bank of Brazil will announce on Wednesday at 9:00 p.m. – 21.30 GMT its monetary policy decision. The market awaits an increase in interest rates of 100 basic points (PB), which would place the types at 14.25% from the current 13.25%.

The Central Bank of Brazil can raise interest rates at its highest level since August 2016

The Brazilian Central Bank has uploaded its rates in the last four meetings. In September, 25 PB raised to 10.75%, in November 50 bp up to 11.25% and in December and January opted for an increase of 100 bp at each meeting, up to 13.25% current.

The market consensus expects Brazil to increase its types again by 100 basic points, taking them to 14.25%, a level not seen since August 2016.

The decrease in inflation in focus, together with the effects of Trump tariffs to steel

The Central Bank of Brazil is raising rates to combat inflation, which rose in February to 5.06% per year, its highest rate since September 2023.

In line with these efforts to reduce prices, Brazil cut tariffs on basic food imports on Monday Like meat, sugar, pasta, coffee, corn, sardines, cookies and sunflower and olive oil. The objective of the Government of Lula da Silva is to reduce the cost of these products for the population.

On the other hand, the markets will be aware of the central bank’s perspective on the Consequences of 25% tariffs that the US US government imposed on Brazilian steel On March 12, taking into account that Brazil is the second US steel supplier behind Canada.

The Organization for Economic Cooperation and Development (OECD) published its perspective report this week, aiming an Rmost marked encouraging of the Brazilian economy. According to the entity, the economy will grow in Brazil at a rate of 2.1% in 2025, below the 2.3% planned in December. In 2026, the country’s GDP will only increase 1.4%, well below the 1.9% previously projected.

The OECD justified the downward review of its forecasts for Brazil for the increase in interest rates of the Brazilian Central Bank and for the affectation that the rise in steel and aluminum tariffs in the United States may have in its exports.

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

The Brazilian real is already reacting to the possible rise of interest rates of the Central Bank of Brazil. He BRL has risen in front of the dollar in the last four days, today reaching its highest level in four months.

The general trend of the USD/BRL is bassist in the short and medium -term temporal frames, and is turning from bullish to neutral in long -term graphics. The pair has fallen today to 5,6488, its lowest level since November 7.

In the event that the Central Bank of Brazil indicates in its statement that it provides for more rates of rates in upcoming meetings, the pair could continue to fallfinding the first important support waits in 5,6362, minimum of November 2024. Below, the USD/BRL could slide around 5,4060, soil last October.

A pair rise will find resistance in the mobile average of 100 periods in the hour graph at 5,7648. Above the round level of 5,800 and the maximum of February in 5,9164.