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19 Apr 2013
Forex Flash: Brazil is hiking, but reluctantly - BBH
FXstreet.com (Barcelona) - Brown Brothers Harriman analysts note that the Brazilian Central Bank decided to hike rates by 25bp last night after days (if not weeks) of shifting market expectations.
They see that yesterday´s move is just the first one of many hikes in a cycle that will total between 100-150bp, n their view, though early dovish signals suggest the lower end is more likely. They add, “The statement was not convincing about the bank’s commitment to hike, and two members voted for no change. As a result, yields came crashing down across the local swap curve in a strong bull steepening move (see graph below).”
They see that yesterday´s move is just the first one of many hikes in a cycle that will total between 100-150bp, n their view, though early dovish signals suggest the lower end is more likely. They add, “The statement was not convincing about the bank’s commitment to hike, and two members voted for no change. As a result, yields came crashing down across the local swap curve in a strong bull steepening move (see graph below).”