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

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