Brazil's aggressive monetary tightening appears to be working. Retail sales fell 1.5% in the month — weaker than forecast — suggesting the country's punishing 14.50% Selic rate is finally cooling household spending.
Mixed inflation signals
Headline inflation rose to 4.72%, but a wholesale inflation gauge actually turned negative in June. Together with softer retail sales, the data point in the same direction: the economy is slowing and price pressure is easing.
Room to ease
The trend gives policymakers room to consider when, rather than whether, to begin cutting rates — a potential turning point for Latin America's largest economy after a long period of high borrowing costs.
Source: Rio Times global economy briefing.