Brazil's consumer price index for August, released on the 11th by the Brazilian Institute of Geography and Statistics, rose 4.22% from a year earlier, slowing from 4.44% in July. It also came in below the 4.27% forecast by economists in a Reuters poll, remaining within the central bank's target range of 3% plus or minus 1.5 percentage points. On a month-on-month basis, prices fell 0.32%, a steeper decline than the market's expected 0.29% drop and the largest negative reading since August 2022. Housing costs fell the most, down 1.87%, with lower electricity rates the main drag, while transport costs fell 0.86% and food and beverages fell 0.34%. Following the release, expectations grew that the central bank will cut rates again at next week's policy meeting. The central bank has so far delivered 25-basis-point cuts at four consecutive meetings, bringing its policy rate down to 14%.
Slowing CPI to 4.22% raises expectations of further rate cuts, pushing Brazilian 10Y bond yields down.
