The soft activity data out of Brazil recently highlights that the bumper Q1 GDP growth was a flash in the pan and points to a slowdown towards 0.3-0.4% q/q over Q2-Q3. Taken together with signs that heat has come out of the labour market, we’re becoming increasingly confident that disinflation will continue and that the central bank will be able to deliver more interest rate cuts than investors currently expect next year.
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