Brazil: some signs of cooling in the labour market

Brazil’s labour market has been a key pillar of strength during the post-pandemic boom, but there are signs that conditions are now starting to cool. While this should take some pressure off wage growth, the labour market will remain an area of concern for the central bank. Even so, as long as it continues to soften and core price pressures keep easing, we think there is scope for interest rates to fall sharply this year.