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The speech of the president of the Banco Central (BC), Roberto Campos Neto, no MacroDay 2021, an event held by BTG Pactual, this Tuesday, the 14th, moves financial assets, especially shorter future interest contracts.

This is because Campos Neto commented that the BC will not act on each new modification of the “high frequency” data. According to him, the authority is monitoring the components of the inflationary process and changes in the short term, but that there will not always be “flight plan changes”, whose focus is on a “longer horizon”.

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For the market, the signal was clear that the rate of increase in the Selic rate of 1 percentage point will not be changed.

“The market practically interpreted it as confirmation of a 1.0 pp rise,” he commented Fabio Guard, manager of Galapagos Capital.

In reaction, the interest rate curve, which projected an increase between 1.25 and 1.50 percentage points at the next meeting of the Monetary Policy Committee (Cupm), between the 21st and 22nd of September, quickly adjusted to a high of 1.0 pp

The short part of the curve took the biggest hit. Contracts for January 2022 sank 0.37 pp, to 6.99%, while longer ones, such as for January 2027, dropped 0.09 pp, to 10.46%. Contracts for 2029 closed practically stable, at 10.72%.

“The longer end was marginally more unanchored”, explains Guarda. “This greater leniency of the BC with current data is making the market place a greater probability of inflation in the coming years.”

According to him, this can also be seen in securities linked to the IPCA, which started to trade with a higher percentage of implicit inflation. “For bonds maturing in 2024, implied inflation, which once traded below 5%, is now at 5.35%,” he said.

According to André Perfeito, chief economist at Necton, if the BC raises by just 1.0 pp at the next meeting, the tendency is for the interest rate curve to become steeper. That is, the longer the highest interest.

“It’s BC’s decision about the speed of adjustment and the lengthening of the adjustment over time. Either he makes this adjustment faster and with stronger highs or looser over time. Maybe he wants to make this adjustment longer in time because he believes that much of the inflation is transitory,” he commented. But, for Perfect, the market wants more interest to be able to balance the expected inflation.

Ivo Chermont, partner and chief economist at Quantitas, said that, after the comment, the manager revised his projection for Selic. “We had raised the forecast for the next meeting to a high of 1.25 pp after the IPCA data, but now we are going back.”

“If I had any time to accelerate, it would be now. It’s very difficult for it to happen later, unless a lot of things change,” he commented.

According to him, the expectation is still for a 10% Selic rate until March next year, but at a different pace. “We project four increases of 1.0 pp and a last one of 0.75 pp”.

On Tuesday, Itaú raised its projection for the IPCA from 7.7% to 8.4% in 2021, and from 3.9% to 4.2% in 2022. Citing a worsening of the balance of risks, the bank points out that started to project an increase in the Selic to more contractionary levels, with three increases of 1.0 pp and the last one of 0.75 pp, reaching 9.0% in 2022.


The Dollar also showed strong swings today. Against the foreign trend, the currency dropped 0.4% this morning. The movement was attributed to another speech by Campos Neto.

The BC’s president signaled operations in the exchange market at the end of the year, when there could be greater demand for the dollar, mainly related to the overhedge adjustment.

“It will probably be necessary to intervene to face specific dollar demands at the end of the year,” commented Campos Neto.

“This brought relative tranquility to the dollar for part of the day, which started to trade against emerging pairs. Weaker than expected US inflation data led to a realization of US stock exchanges and Treasuries, causing the dollar to trade in the world stronger against emerging markets. However, the currency held here a little due to Campos Neto’s comment about overhedge,” said Guarda.

With the worsening of the US stock exchanges this afternoon, the dollar, however, rose again and registered, at 4:45 pm, an increase of 0.72%, at 5.26 reais.

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