Itaú Asset warns of inflationary risks at 13.75% Selic rate for 2027
The Itaú Artax fund cites El Niño and tax reform as potential inflation drivers that could complicate the Central Bank's policy decisions following this week's rate cut to 13.75%. While a new cut of 0.25 percentage point is expected, experts highlight significant uncertainties regarding fiscal space and exchange rates.
The Brazilian financial market anticipates a central bank interest rate cut of 0.25 percentage points next week, which would bring the Selic rate to 13.75 percent annually. However, analysts from Itaú Asset express deep concern about potential economic conditions in 2027 that could hinder further monetary easing. Bruno Bak, the fund manager for the Itaú Artax multi-asset fund, warns that a renewed inflationary spike is the primary risk. He identifies specific factors such as unfavorable El Niño scenarios, the end of the 6×1 tax scale, and ongoing tax reforms. Additionally, he notes risks associated with exchange rate depreciation and high levels of private sector debt which could constrain public fiscal flexibility. The fund argues that if these headwinds materialize, they will limit government policy options and increase pressure on monetary authorities. This assessment aligns with views from economists at the Fundação Dom Cabral and consulting firms 4Intelligente and Tendências, all of whom are expected to discuss complex trade-offs regarding future inflation targets amid a generally low-inflation IPCA forecast for this Friday.
