Will Brazil see a 75 basis-point Selic hike in March?

Brazil traders start to bet on biggest rate hike in a decade. Fiscal concern and worsening pandemic take a toll on markets. Rates curve begins to price 75 basis-point Selic hike in March.

RIO DE JANEIRO, BRAZIL - (Bloomberg) Brazil traders have begun to bet the central bank may deliver the most aggressive interest rate hike since 2010 as the sell-off in local assets deepened amid growing concern about the country’s fiscal outlook.

Swap rates, which were already fully pricing in a half-percentage point rate increase at the bank’s March 17th meeting, are now implying chances of an even bolder move, of 75 basis points.

“There’s a chance the scenario will deteriorate so much until the next meeting that a 50 basis point hike would seem dovish,” said Solange . . .

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