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Government To Cut Up To BRL 5.7bn In Expenses This Year

BRAZIL
  • Local media report that the government will cut up to BRL 5.7bn in non-obligatory expenses from this year’s budget to help meet the fiscal target in the face of higher spending on social security benefits. According to Estadão, this could impact spending on the federal police and federal highway projects, among others.
  • Meanwhile, in the latest of a series of coordinated speeches from the BCB in recent days, Director of Monetary Policy Gabriel Galipolo said at an event today that fiscal issues can’t be an excuse for not pursuing the inflation target. Consistent with other BCB officials, he too said that de-anchoring inflation expectations is what has concerned him the most.
  • BRL has remained under pressure today, although it has outperformed MXN and CLP, currently down 0.7% against the dollar. DI swap rates are also up by 15-20bp in the belly of the curve, amidst the prospect for a higher terminal SELIC rate.

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