Brazil’s inflation is at a high level that requires attention, the central bank said in response to a report showing that consumer prices rose in January at the fastest pace in almost eight years. The 12-month inflation rate reached 6.15% in January.
“We are going to see the central bank continuing to use the spot currency as its main monetary policy tool for the moment,” said an asset manager.
Bottom Line: The fact that the Central Bank went public to demonstrate concern about the level of prices made investors foresee the possibility that Brazil’s monetary authority may change its strategy ahead of schedule. The yield curve begins to show a real chance of the SELIC rate to go up in the second of this year.
Source: Valor, Bloomberg, Itau