BCB to hike 50bp and Mexico inflation in focus

In Brazil, even though it is still expected that the BCB will continue hiking the Selic rate, very weak economic activity during the past weeks reduces the likelihood of a final 25bp September hike. 

For the July 29 meeting, however, the official communication of the central bank still downplays the risks for growth in contrast to a worrisome inflation outlook. 

Given the timid move in 2016 inflation expectations and the recent upside surprises in inflation since the previous meeting, it is beleived that the most likely outcome is a 50bp hike. 

"An above-consensus reading of 0.62% m/m is anticipated on the inflation front (market: 0.48%), while for the latter unemployment could marginally increase from 6.7% to 6.8% in line with market consensus", says Barclays.