A failed coup d’état, inflation worries, Lula’s fiscal plans

The end of Castillo’s chaotic presidency in Peru may bring some near-term relief to investors, but it won’t solve the country’s dysfunctional political system. Political gridlock is here to stay and will become an increasing drag on the economy. Meanwhile, the raft of inflation figures released this week paint a picture of generally still strong price pressures. And in Brazil, the one country in the region where inflation is on a clear downward trajectory, President-elect Lula’s spending plans alongside his announcement of Fernando Haddad as Economy Minister today could force policymakers to keep interest rates high for longer.