The stronger-than-expected Brazilian inflation reading for the first half of March, of 10.8% y/y, will be followed by a jump to 11.5-12.0% in the near term as recent fuel price hikes filter through. While the central bank has given signals that there may just be one more 100bp interest rate hike in the current cycle (to 12.75%), we suspect that the coming rise in inflation will prompt it to tighten a little further.
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