Central banks diverge, Milei bets on taming inflation

The Brazilian central bank’s statement at this week’s meeting left the door open for further interest rate cuts and, taken together with the worsening growth outlook, we’ve pencilled in a 25bp reduction in the Selic rate (to 13.50%) in November. But in Mexico, where the central bank is likely to leave rates on hold next week, the case for the next move to be a hike is strengthening. Elsewhere, the continued tight fiscal stance outlined in Argentina’s 2027 budget suggests that President Milei will seek support in next year’s election on the back of taming inflation rather than loosening the fiscal purse strings.