BCB to deliver 50bp hike

In Brazil, despite very weak economic data in the past few weeks, it can be expected that the BCB will hike the Selic rate by 50bo in its next meeting. 

"After last week's adjustment in the primary surplus and recent inflation developments, it is believed that Copom models might continue showing that more tightening will be necessary in order to move inflation to the midpoint of the target in 2016 and to strengthen the process of anchoring inflation expectations", says Barclays. 

While this keeps monetary conditions tight, fiscal imbalances continue to deteriorate in an environment of a very weak economy and subdued global economic growth. 

"This should weigh on Brazilian assets risk premia, exerting additional pressure to the BRL as a credit rating cut looks more likely", added Barclays.