The decline in inflation in Brazil to 4.8% y/y in the middle of November means that – barring a major surprise in the full-month outturn – the central bank is on course to lower the Selic rate by another 50bp at its meeting in a couple of weeks. But the strength of services inflation will remain a concern for policymakers and supports our view that interest rates won’t come down as far as most expect next year.
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