The larger-than-expected drop in Brazilian inflation in November, to 4.1% y/y (from 4.6% y/y in October), reinforces our view that Copom won’t rush to tighten policy. We expect the Selic rate to be left unchanged at Wednesday’s meeting, and have pencilled in a first hike in Q1 2019. Meanwhile, inflation data from Chile were soft too, but a rate hike in January still looks more likely than not.
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