Weekly Report 135
✅ Brazil’s economic activity posted a moderate advance in August, recovering part of the losses from early in the third quarter but still expanding at a contained pace . The services sector showed moderate yet broad-based growth across segments, while retail also performed positively, with core retail sales rising in a widespread manner and broad retail maintaining strength in the automotive segment. Aggregating these results, the IBC-Br posted a positive variation, reflecting solid performance across sectors even as agriculture contributed negatively. Despite the sequential increase, the movement indicates a temporary and limited rebound after months of weaker results, with overall activity still losing momentum under the lagged effects of monetary tightening.
✅ In monetary policy, statements from Central Bank officials reinforced the need to maintain a cautious stance amid persistent uncertainty. During recent presentations in Washington, BCB directors maintained a hawkish tone, emphasizing that the monetary authority should keep interest rates elevated for a prolonged period to ensure calm and predictable decision-making. The message underscored that this policy cycle is more uncertain than usual, requiring a more restrictive and patient approach until there is clear evidence of inflation convergence to the target. In its risk balance, the Central Bank still sees inflationary pressures from the labor market and services, though it acknowledged that inflation expectations have been gradually easing. Overall, the communication reinforced that the BCB remains committed to consolidating disinflation.
✅ In the United States, Federal Reserve Chair Jerome Powell’s remarks reinforced expectations of further rate cuts, while renewed trade tensions with China heightened global market uncertainty . Speaking at the annual meeting of the National Association for Business Economics (NABE), Powell signaled that the Fed is likely to deliver another 25-basis-point cut at the October meeting, given the weakening labor market and the potential for higher unemployment if hiring continues to slow. He also noted that the central bank may soon end its balance-sheet reduction to ensure sufficient system liquidity. On the geopolitical front, U.S.–China relations have deteriorated once again, with the Trump administration alternating between conciliatory gestures and renewed tariff threats, while Beijing responded with sanctions on U.S. maritime companies and warned of further retaliation.
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