Inflation Continues Falling

BRAZIL ECONOMICS - Report 24 Apr 2017 by Affonso Pastore, Cristina Pinotti, Marcelo Gazzano and Caio Carbone

For the first time since January 2010, inflation accumulated over the preceding 12 months is now below the target, and all signs are that the deceleration process will continue in the coming months. The recession is nearing its end, but the tendency will be for very slow recovery. This, along with a relatively stable exchange rate, strengthens the projection that inflation at the end of 2017 will be below the target. Therefore, the Central Bank should continue cutting the SELIC rate, which we estimate will reach 8% by year-end.

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