Deceleration of underlying services eases additional inflationary pressure for the Central Bank – 08/30
The August IPCA-15 presented a more positive composition, with surprises concentrated in more volatile items. Although the level of airline fares prevented a greater relief in service inflation, the underlying perspective contributed to a more constructive outlook for overall inflation in August. Regarding the labor market, the deceleration of labor-intensive service inflation is a relevant factor in this release, as employment data remains strong at the margin. Thus, given the Central Bank’s explicit concern about the potential impacts of the labor market on service inflation, the marginal data creates a slightly more favorable environment for the committee, especially when considering labor-intensive metrics. Furthermore, Gabriel Galípolo, the current director of monetary policy, has been officially nominated for the position of Central Bank president. Finally, to prevent dysfunctions in the exchange rate, the Central Bank conducted foreign exchange swap auctions this Friday.
For more information, please check our Weekly Report 79.
