In September, prices increased by 4.1% year-on-year. The figure is far from the 3% that the monetary authority of the neighboring country has as its objective.
The director of international affairs of the Central Bank of Brazil, Paulo Picchetti, stated this Wednesday that Inflation expectations in Latin America’s largest economy have been systematically higher than the monetary authority’s target.
At an event held in Washington, Picchetti stated that consumer prices in Brazil have slowed recently, but have stabilized at levels higher than the annual goal of 3%.
High consumption and inflation put pressure on rates in Brazil
In September, the BCB raised the Selic rate by 25 basis points for the first time in two years, 10.75% in a context of booming activity, increased consumption and bullish projections on inflation.
In August the year-on-year price index in the largest country in South America It slowed to 4.2% and in September to 4.1%, but the figure is still far from the goal of 3%.
On few occasions the Brazilian rate was more positive than now in real terms. According to projections, the cycle of increases could extend until reaching 12.5% in the first quartergiven the resilience of the economy and the pressures on prices.
Bank authorities have been clear in pointing out that, although they cannot always give precise guidance on future movements, they are committed to maintaining economic stability and acting firmly at any sign of deviation from the 3% inflation target.
The rise in rates in Brazil could generate a appreciation of the real, which would be favorable for emerging currencies and would help reduce pressure on dollar quotes in Argentina. Likewise, the market expects that “carry trade” bets in the Brazilian real will be strengthened again, even more so considering that the neighboring country already has the most attractive volatility-adjusted rate in the region.
Source: Ambito
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