At cross purposes

BRAZIL ECONOMICS - Report 20 Oct 2025 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

From the second quarter onward, signs of economic slowdown became increasingly evident. To ensure a consistent path toward inflation convergence at the target midpoint, it is crucial that this trend be maintained. However, the risks of interruption are far from negligible.

The government has been acting actively in the credit market, often in direct opposition to monetary policy, while expanding measures to stimulate consumption. Despite the constraints imposed by the New Fiscal Framework, initiatives aimed at circumventing its limits and sustaining activity have multiplied, particularly as elections draw closer.

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