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Supreme Court Decision On Social program, Focus Survey

BRAZIL
  • Assets have come under pressure from the open following a preliminary decision by a Supreme Court minister determining that expenses intended to fund federal government’s income distribution program are excluded from the spending cap rule.
  • Justice Gilmar Mendes also determines that the amount of 600 reais be maintained and authorizes, “if necessary, the supplementary use of extraordinary credit”.
  • It is still unclear how much of a fiscal gap that decision will create, but there is a chance it will be smaller than the one Lula’s transition team was trying to approve in Congress.
    • Decision was not expected and it comes before the Top Court resumes Monday the vote on the constitutionality of amendments to the spending bill, known as the “secret budget”.
  • Inflation forecasts in the latest Focus survey from the BCB:
    • Economists Cut 2022 CPI Forecast to 5.76% From 5.79%
    • Economists Raise 2023 CPI Forecast to 5.17% From 5.08%
  • Additionally, the benchmark Selic is now expected to reach 9% by December 2024, up from the prior estimate of 8.5%.

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