The recent weakness of Brazilian inflation appears to be due in part to persistently weak food inflation, but more importantly it looks like the large output gap in the economy has dragged down core inflation. As a result, while the headline rate will drift up as food inflation returns to positive territory, it will do so only slowly and COPOM will be in no rush to shift into tightening mode.
Subscriber content
Read this in full, free
Start a free trial and use one of your 10 free starter credits to unlock this piece.