BCB's Picchetti expects lower growth from cyclical sectors this year; this is a sign monetary policy is working
Importance
Level 1
- More important and more concerning, are inflation expectations deviating from target in 2027 and 2028.
- It is difficult to explain the premium embedded in inflation expectations deviating from the target.
- Market does not foresee fiscal consolidation, which may explain part of de-anchored inflation expectations.
- We do remain cautious, still not sure about how the conflict is helping economic growth in Brazil.
- Uncertain environment affects both downside and upside risks for inflation, considering the potential duration and consequences of the conflict in Iran.
- Brazilian Real is performing well, but it is not relied upon to carry out the monetary policy function.
- As of now, things have not improved since March meeting.