The slight increase in Brazilian inflation in the first half of this month, to 2.6% y/y from 2.5% y/y in August, is the first real sign that the headline rate may have now bottomed out, and reinforces COPOM’s message that the easing cycle is nearing an end. We continue to expect COPOM to slow the pace of rate cuts to 75bp at its meeting next month, taking the Selic rate to 7.50%.
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