The weight of inertia

BRAZIL ECONOMICS - Report 18 May 2026 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

The inflation scenario has been marked by both the oil shock, which pushed up inflation expectations even at longer horizons, and resilient economic activity featuring a still tight labor market. Meanwhile, by extending the horizon for inflation convergence to the target, the Central Bank has contributed to increasing inflation inertia. This mechanism is especially relevant for IPCA services component. Our estimates of the Phillips curve indicate that inertia exceeds the expectations channel in underlying services measures, and that the convergence process to the target, besides being slow, will require a sustained negative output gap for a prolonged period.

Now read on...

Register to sample a report

Register
Must have at least 8 characters
Sign-in
Forgot your password?
Copyright 2026 GlobalSource Partners. All rights reserved. This report is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This report is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this report or its contents.