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BRAZIL
  • **Rodrigo Pacheco elected Senate President securing 57 votes versus 21 for his rival Tebet.
  • **Arthur Lira elected Lower House Speaker, winning 302 votes versus 145 votes cast for Baleia Rossi.
  • No surprises here. May offer some respite in the short term for local assets. Given both candidates were supported by Bolsonaro, we should likely see less friction in passing the government's reform agenda. Lira too has said he would secure a constitutional amendment with mechanisms to cut expenses if needed to comply with the spending ceiling.
  • A definite win for Bolsonaro, especially as impeachment threat is substantially hindered.
  • Undoubtedly, there will be obstacles ahead as headlines will be dominated around the need for further stimulus. Pacheco told reporters after the result that "I'll start a conversation with the government so we can reconcile the spending cap rule with social assistance."
  • The central bank has always been very vocal surrounding the fiscal trajectory. Previously stating, 'changes in the fiscal policy that affect the public debt trajectory or compromise the fiscal anchor would motivate a reassessment, even if the spending ceiling in nominal terms is still maintained.'
MNI London Bureau | +44 020 3983 7893 | jack.lewis@marketnews.com