High Inflation To Limit Rate Cuts

Consumer price inflation in Brazil did not peak in August, as Central Bank President Alexandre Tombini had predicted, with the broad national consumer price index (IPCA) up 7.33% y-o-y in the first half of September, from 7.23% at the end of August. This reading is in line with our view that Brazil is not experiencing disinflation, and it now becomes harder for Tombini to persist with further rate cuts over the next few months, which clouds the interest rate outlook.

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