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SAO PAULO – The Monetary Policy Committee (Copom) of the Central Bank (BC) surprised most of the market by deciding yesterday to raise the Selic rate by 0.75 percentage point, to 2.75% per annum, compared to the bet majority of economic agents of an increase of 0.50 points.
And although in the statement issued with the decision, the monetary authority has indicated that it must maintain the same rate of adjustment in the next meeting, there are already people in the market who understand that the movement should be even more acute.
During a live held on Wednesday night (17) by the Spiti house of analysts, Felipe Guerra, CIO of Legacy Capital, said that his expectation is that, at the May meeting, the Copom will take the Selic to at least 3.75%, with an increase, therefore, of one percentage point.
In the expert’s assessment, the upcoming inflation data should still be under considerable pressure due to the influence of wholesale prices, forcing the Central Bank to increase the rate of increase in interest rates.
“The BC will surely be surprised by higher inflation than it projects,” Guerra said. The manager works with an inflation for 2021 of 5.5%, above the ceiling of the goal, of 5.25%.
“The faster you go up and adjust something that is very bad, the faster the benefits of inflationary convergence are reaped and the economy can be reorganized,” said the manager, who understands that the BC could already have started the tightening cycle of monetary policy. with an increase of one percentage point, or even more.
According to Guerra, due to the country’s macroeconomic conditions, the most balanced level for the basic interest rate today would be closer to 5%.
Rise in interest rates, stock market and real
When reading that the monetary authority will have to accelerate the rate of adjustment of the Selic rate, the manager of Legacy also understands that the opening movement of future interest rates in the short term, which had been occurring in recent days, still has space. to continue for a while longer.
“Short-term fixed income is really very vulnerable,” Guerra said, adding that the rise in local interest rates is also influenced by the same movement seen today in more developed markets.
For this reason, the manager’s multi-market portfolio has positions taken in interest, in Brazil and abroad, which means that the fund must earn money if the rates actually undergo new openings, that is, an increase in premiums.
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• BC raises Selic to 2.75%, but managers still prefer risk assets; understand why
Regarding the exchange rate, the manager’s expectation is that the real will appreciate, which is reflected in a long bet (which foresees a rise) in the Brazilian currency, although not in a relevant size in the portfolio.
The increase in the Selic rate and the consequent drop in premiums at the longest points of the interest curve, added to a fiscal policy that maintains its foundations without major deviations and a pandemic that will cool down in the coming weeks, should form the necessary combination to allow decompression of the exchange rate, projects the specialist.
Guerra also said that the position indicated by the Central Bank, of greater concern to control inflation through monetary tightening, makes him more optimistic about the prospects for local stocks. “With the BC looking for credibility, we are more excited about all the assets in Brazil.”
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