Brazil inflation

In Brazil, inflation continued with the downward trend in annual terms, in line with expectations. We revise our forecast for the year slightly upwards, and still expect continued moderation in December driven by base effects. In Chile, CPI inflation registered a null variation, while the economic activity indicator continued with slow progress, supporting our vision of additional monetary stimulus in the first quarters of 2015.

In the first case we maintain our forecast that inflation will maintain its downward path and will be within the target range by the end of the year; we reiterate our expectation of additional adjustments in the Selic rate. In Chile we estimate that inflation will end the year well above the central bank’s projection, which we expect to keep its neutral bias for the MPR and hold the current level for the time being. Annual inflation has started to decline in Mexico, without demand-side pressures. We remain confident that inflation will close the year below 4.0%.