Softer CPI Stronger Case For Easing

June inflation in Brazil slowed more than expected, supporting the outlook for further rate cuts by the Banco Central. However, analysts maintain caution regarding future upside risks from El Niño and fiscal policy.

Key Takeaways

• 1.June inflation slowed to 0.16% mom, reinforcing the case for 25bps rate cuts in August and September.
• 2.Upside risks to inflation persist due to El Niño weather patterns and potential election-related fiscal stimulus.

Table of Contents

• Weaker food and fuel prices contributed to the slowdown in June inflation
• Inflation expectations are starting to ease
• Inflation should peak in early 2027 before easing
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