BanRep hiked the policy rate by +100bp to 11.25% in a split decision and in line with market pricing. As in January, four members voted for an increase of 100bp, while among the dissenters one voted for pause and two for a 50bp cut. These votes included that of FinMin Avila. However, Avila reportedly left the board meeting and held a press conference ahead of the official BanRep post-meeting press conference, where he disclosed the decision of the majority four ahead of the formal announcement from BanRep. The markets still have 175bp more of hikes priced in over the next six months. Overall the rate decision is market positive but the noise regarding the impasse with government representatives will likely continue to feed some risk premia.
For more, including market takeaways, please see full note.