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Brazil: chunky rate hikes to go on despite recession

Brazil’s central bank gave a clear steer that, even though the economy entered recession in Q3 and shows little sign of growth in Q4, it will follow the 150bp hike in the Selic rate yesterday (to 9.25%) with further aggressive tightening. We now think that the Selic rate will reach 11.50% by early 2022.

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