The sharp fall in Brazilian inflation in March, to 9.4% y/y from 10.4% y/y in February, could prompt COPOM to take a less hawkish stance. But with inflation still likely to remain well above target this year, and the real vulnerable to renewed weakness, we’re comfortable with our forecast for interest rate cuts to be delayed until Q4. Meanwhile, the decline in Chilean inflation last month adds to the evidence that interest rate hikes over the coming quarters are unlikely.
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