SÃO PAULO, 18 Dec (Reuters) – Speech by the president of the Central Bank, Gabriel Galípolo, seen as softer by investors, caused DI rates to erase part of the gains this Thursday and end with slight increases compared to the previous day’s adjustments, amid the reading that the BC’s decision on interest rates in January remains undefined.
At the end of the afternoon, the DI rate for January 2027 was 13.845%, compared to the adjustment of 13.83% in the previous session. At the long end of the curve, the rate for January 2035 was 13.735%, compared to the adjustment of 13.700%.
In the morning, the Monetary Policy Report showed that the BC projects 12-month inflation of 3.2% in the third quarter of 2027 — still slightly above the center of the ongoing target pursued by the institution, of 3%.
Take advantage of the stock market rise!
The third quarter of 2027 is now considered by the market as a key period, as it becomes the reference for the relevant horizon of monetary policy at the BC’s January meeting.
“The BC’s commitment is to the continuous inflation target of 3.0%, and its decisions are guided so that this objective is achieved over the relevant monetary policy horizon”, said the authority in the report.
During a press conference, however, both Galípolo and the BC’s director of Economic Policy, Diogo Guillen, pointed out that the projections are embedded with uncertainty and that there are limitations to them over an 18-month horizon.
Continues after advertising
Regarding this, Guillen reinforced the idea, already contained in last week’s statement from the Monetary Policy Committee (Copom), that the BC aims “around the target” for inflation.
Galípolo also said that the autarchy remains dependent on data and that “there are no closed doors” nor “given arrows” for monetary policy decisions. Last week, the BC’s Monetary Policy Committee (Copom) maintained the Selic at 15% per year, without giving exact indications about what it will do at the January meeting.
“Agents are trying to find tips in text that don’t give tips,” said Galípolo. “We didn’t decide what we’re going to do either at the January meeting, or at the March meeting, or at the next ones. We didn’t want to communicate what we’re going to do because we haven’t decided what we’re going to do”, he reinforced.
Professionals interviewed by Reuters pointed out that the comments on monetary policy were mild, maintaining the chances of the BC cutting the Selic by 25 basis points at the end of January. In reaction, DI rates lost strength and even dropped in the early afternoon.
The DI rate for January 2028, which reached a maximum of 13.440% (+18 basis points) at 9:56 am, dropped to 13.210% (-5 basis points) at 1:05 pm, after Galípolo’s comments.
“The statement (from Copom) was tough, the minutes were tough, and the report put inflation of 3.2% on the relevant horizon, while the market expected 3.1%”, commented analyst Matheus Spiess, from Empiricus Research, during the afternoon.
Continues after advertising
“But there was an effort by Galípolo to anchor expectations more in economic data”, he added, when justifying the loss of strength in rates in the wake of the BC president’s comments.
The political scenario also remained in focus.
On Wednesday, the political stress caused by the candidacy of Senator Flávio Bolsonaro (PL) for the Presidency boosted DI rates in such a way that the curve began to price a majority probability of the BC maintaining the Selic at 15% in January. Previously, pricing indicated greater chances of a 25 basis point cut.
Continues after advertising
This Thursday, an AtlasIntel survey for Bloomberg indicated that President Luiz Inácio Lula da Silva maintains the lead in voting intentions in the scenarios for the 2026 presidential election, while Flávio performs better than the governor of São Paulo, Tarcísio de Freitas (Republicans), in the first round simulations.
However, in an interview with Valor, the president of the União Brasil-Progressistas federation, senator Ciro Nogueira (PP-PI), stated this Thursday that Tarcísio’s name — the market’s preferred candidate — is not buried. Ciro defended that the electoral scenario be re-evaluated in March, to verify Flávio’s viability.
Professionals interviewed by Reuters stated that Ciro’s comment was well received, helping to deflate the interest rate curve.
Continues after advertising
Abroad, Treasury yields fell this late afternoon, after consumer inflation in the US in November was lower than expected, raising bets on an interest rate cut by the Federal Reserve in January.
At 4:41 pm, the ten-year Treasury yield — a global reference for investment decisions — fell 3 basis points, to 4.122%.
