Growing Inflation and Imminent Elevation of the SELIC Rate

BRAZIL ECONOMICS - Report 14 Dec 2015 by Affonso Pastore, Cristina Pinotti, Marcelo Gazzano and Caio Carbone

Despite the strong contraction of economic activity, inflation shows no signs of waning. The growth of the IPCA for November was higher than all expectations, in particular the acceleration of the core rate and diffusion index. So even in face of a recession that already ranks as one of the longest and deepest in the past 35 years, the Central Bank is likey to start a tightening cycle. We have observed on many occasions that because of the fiscal disorder experienced by the country, the goal of bringing inflation to the target more quickly will cause an additional decline in GDP, accelerating gross public debt growth and aggravating the fiscal crisis. But the choice is obviously the Central Bank’s, not ours, and the recent behavior of the IPCA strengthens the probability the monetary authorities will act as they have been signaling.

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This report is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This report is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this report or its contents.