Consumer inflation continues on a downward trend, including a slowdown in core prices. This more favorable core price scenario in the short term is one of the factors that will allow Copom to advance in the cut cycle at this current pace. The Copom minutes were consistent with the continuation of 50 bps (basis points) rate cuts, reinforcing the statement’s hawkish tone, emphasizing caution, and detailing external and fiscal risks. The Tax Reform was approved in the Senate this week, and we expect its final approval by year-end. Finally, Powell’s speech brought a tougher tone than his previous one, and we believe Fed members’ speeches will continue to be hawkish, contributing to some financial conditions tightening.
For more information, please check our Weekly Report 39.
