Concerns that Brazil’s economy is overheating are justified – to an extent. But the economy looks very different now compared with the last bout of overheating in the early 2010s. As a result, while inflation pressures are likely to remain uncomfortably strong, we don’t expect interest rates to rise sharply in this cycle. And unlike the situation just over a decade ago, this current period of strong growth is unlikely to be followed by disorderly currency falls and a steep economic downturn.
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