BRAZIL: BCB’s David Sees Signs that Monetary Policy is Taking Effect
* Continuing to monitor remarks from BCB director Nilton David who has said that the way monetary policy has been conducted is taking effect, with latest inflation data showing signs that the more cyclical components are trending downward. He also sees signs that the tight monetary policy stance is bringing GDP to potential. * Nonetheless, he reiterates that the unemployment rate is still very low, and the response for the kind of uncertainty that the BCB is seeing is to make smooth, predictable moves in interest rates. He also says that the BCB is considering macroprudential measures for credit to mitigate systemic risks. * His remarks come ahead of the BCB's Q3 monetary policy report tomorrow and after the publication of the minutes to last week's Copom meeting yesterday, which reiterated the committee's cautious, data dependent stance. This keeps the door open to another rate cut in November, although the scope for further easing remains limited by the geopolitical, fiscal and election uncertainties. * David also says that he doesn't see major swings for BRL, which nonetheless remains under pressure today, along with much of the EMFX complex, in the face of persistent post-Fed d
* Continuing to monitor remarks from BCB director Nilton David who has said that the way monetary policy has been conducted is taking effect, with latest inflation data showing signs that the more cyclical components are trending downward. He also sees signs that the tight monetary policy stance is bringing GDP to potential. * Nonetheless, he reiterates that the unemployment rate is still very low, and the response for the kind of uncertainty that the BCB is seeing is to make smooth, predictable moves in interest rates. He also says that the BCB is considering macroprudential measures for credit to mitigate systemic risks.
* His remarks come ahead of the BCB's Q3 monetary policy report tomorrow and after the publication of the minutes to last week's Copom meeting yesterday, which reiterated the committee's cautious, data dependent stance. This keeps the door open to another rate cut in November, although the scope for further easing remains limited by the geopolitical, fiscal and election uncertainties. * David also says that he doesn't see major swings for BRL, which nonetheless remains under pressure today, along with much of the EMFX complex, in the face of persistent post-Fed dollar strength. 7% higher today to unwind previously losses this week.
2483, the Aug 14 high.