Analysts see Copom in check in the face of fiscal and unanchored inflation
On the eve of Super Interest Wednesday, economists see a macroeconomic scenario that appears to show no signs of relief for the Brazilian Central Bank. The expectation of a timid cut in the Selic - of 0.25 percentage points - tends to materialize this Wednesday, despite not being a consensus in the financial market, which is divided with those who bet that the Copom will end the small cycle of easing rates sooner.
The big challenge for the BC is the combination of factors that result in a "perfect storm", with unanchored inflation expectations, expansionary fiscal policy and extreme weather events. This diagnosis was made by economists who participated this Tuesday (16) in the event "Investment Opportunities in Brazil and the world", held by Inter Asset.
"Inflation is unanchored. We will have an IPCA above 5% for this year and, in 2027, expectations are already unanchored. No country can make the business environment competitive at this level", highlighted Alexandre Silvério, CEO and CIO of Tenax Capital.
Gustavo Pessoa, who is a founding partner of Legacy Capital, assesses that there is a "dispute" between monetary policy and fiscal policy. According to him, while the BC aims for a 3% target for inflation, the inspector seems to act towards a target of 5%.
In addition to the fiscal aspect, the economist cites the effects of the project that ends the 6×1 scale. The assessment is that the change will increase costs for the production sector, which will have to compensate for the drop in hours worked by employees.
"[The PEC] takes away flexibility from the labor market. At first, income is good, but then unemployment and informality will increase, and the supply of services by companies will worsen. This also discourages inflation expectations", he stated.
People say that 6×1 is already included in the accounts of financial market analysts in their macroeconomic projections and recalled the Focus Bulletin, which has announced an increase in expectations for the IPCA and interest rates this year.
The report on Monday (15) brought a new rise in expectations for prices and now sees inflation at 5.30% in 2026. Economists consulted by the BC also raised the estimate for the Selic rate and project an interest rate of 13.75% this year, in other words, less space for the Copom's cycle of cuts to continue.
Inter event with economists debated the macroeconomic scenario in Brazil and the world - Credit: Jorge Metne
One of the main items putting pressure on the IPCA is food. In May inflation, the group had the biggest increase for the month in 18 years. The IPCA itself had the highest rate for May since 2021 in the period.
Now with El Niño, economists see a worsening of this indicator, focusing on so-called in natura products, such as fruits and vegetables, which should have their production affected by the phenomenon.
The challenge of monetary policy, however, does not only affect Brazil. The Federal Reserve also finds itself facing a dilemma, with ongoing tension in the Middle East and data on heated economic activity in the United States.
Ian Lima, fixed income portfolio manager at Inter Asset, also draws attention to the high level of investment - capex - that companies and governments are directing towards artificial intelligence and the construction of data centers.
Lima understands that this movement is already putting pressure on prices in the United States. Gustavo Pessoa reinforces the analysis and also said that the calculations indicate that AI already has a weight of around 1% in American inflation. For the Fed, the market expects the rate to remain unchanged.
Source: CNN