Brazil central bank flags oil, El Niño, labor and FX shocks behind inflation rebound
TLT•Brazil's central bank said higher oil prices, El Niño-related pressures, the end of the 44-hour work week and a weaker currency contributed to a worsening inflation outlook. Policymakers halted their easing cycle and kept the Selic rate at 13.75%.
1. Four supply shocks
Minutes of last week's meeting said the worsening inflation outlook, despite slower economic growth, reflected higher oil prices, El Niño-related pressures, the effects of ending the 44-hour work week and a weaker currency amid domestic policy uncertainty. The central bank said slowing domestic demand and growth projected below potential could help contain the risk that these shocks feed into broader, more persistent inflation.
