WEEKLY REPORT Brazilian inflation improves, while US pressures keep monetary policy in focus – 09/11
✅ In the United States, inflation data showed mixed signals but remained consistent with a scenario of significant inflationary pressures. CPI accelerated to 0.40% MoM, with core inflation at 0.29%, above expectations, mainly reflecting higher services inflation, while headline PPI also accelerated, driven by energy. Despite the slowdown in core PPI, the composition of the data reinforces the need for caution in the conduct of monetary policy. Against this backdrop, we maintain our expectation of a 25 bps Fed hike in September, taking the policy rate to 4%.
✅ In Brazil, August IPCA delivered a more favorable reading, with deflation of 0.32% MoM and an improvement in the composition of core inflation measures and underlying services, despite pressure from cigarette price adjustments. The reading reinforces the improvement in inflation at the margin and, combined with recent signs of activity slowdown, supports our expectation of continued monetary easing. For next week, we expect a 25 bps Copom cut, taking the Selic rate to 13.75%, while PMC and IBC-Br data should provide additional information on the intensity of the activity slowdown.
