The further rise in Brazil’s inflation rate, to 4.9% y/y, in November alongside the weakness in the real and strong economic growth mean that Copom is nailed on to step up the pace of monetary tightening, probably with a 75bp hike , to 12.00%, tomorrow. Further tightening is on the cards in early 2025 and the risks to our Selic forecast are skewed to the upside, particularly if the government fails to better address investors’ fears about the state of the public finances.
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