Macroeconomic Forecast Brazil

BMI View: Brazil's broad consumer price inflation index (IPCA) registered a slowdown in growth in November 2011, to 6.64% y-o-y from 6.97% the previous month. This trend is in line with our own 6.58% end-2011 estimate, and supports our view that consumer prices will continue cooling in 2012. However, with credit growth still strong, at 18.2% y-o-y in November, and the labour market still tight, we do not expect inflation to cool rapidly over the next 12 months, and therefore hold to our end-2012 IPCA forecast of 5.50%.

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