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Citi Revise Brazil Inflation Forecast To 6.7% in 2022 From 5.8%


From the Bloomberg article referencing the research note:

  • Citi analysts predict higher inflation in Brazil with higher domestic oil prices and current inflation measures above estimates.
  • Domestic gasoline wholesale prices set by Petrobras are 5-10% lower than international parity prices. Congress’ bill curbing taxes on oil prices could eventually end up decreasing consumer prices but impact is still unclear.
    • It is very likely government will adopt an additional measures that would hurt fiscal accounts
  • “Net effect of the higher commodity prices (combined with a still depreciated currency rate), the higher-than-previously expected domestic inflationary inertia, and a fuel subsidy bill should be mostly inflationary,” says research note. (BBG)
As a reminder, the next BCB meeting/decision is next Wednesday following the FOMC where consensus expectations remain for a 100bp increase of the Selic rate to 11.75%.

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