Interest Rates To Climb Higher

May 2008 | Ratings Update

We have revised up both our Selic rate and inflation forecasts for Brazil, now expecting the end-year Selic rate to stand at 12.50%, and inflation to reach 4.65% y-o-y. We note that risks remain to the upside, as inflation expectations remain high and ongoing food inflation risks spilling over into other components of the consumer price basket, especially in light of record high global energy prices, which may push up on housing and transportation costs.

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