“However, the decision was not unanimous and two members (Correa-Marques and Volpon) voted for a 50bp increase to 14.75%. Interestingly, the statement dropped the comment “The Committee understands that maintaining this level of the basic interest rate, for sufficiently long period is necessary for the convergence of inflation to the target in the relevant horizon for monetary policy. “The COPOM emphasizes that monetary policy will remain vigilant to achieve this goal.”
“This suggests that, given factors such as inflation expectations, COPOM is no longer as resolute in keeping the SELIC rate at 14.25% indefinitely, and passively waiting for inflation convergence to target. The uptick in inflation expectations is possibly driving the two dissents, and the statement alteration was an acknowledgement of greater future flexibility to increase rates should it be required. The minutes will be released December 3rd.”
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