The rise in Brazilian inflation to 10.5% y/y in February will be followed by further increases to more than 11% in the coming months on the back of higher fuel prices. While Copom hinted at its last meeting that the tightening cycle was nearing an end, the worsening inflation outlook means we expect a further 200-250bp of rate hikes, including a 100bp rise in the Selic rate (to 11.75%) next Wednesday.
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