Brazil's annual inflation rate exceeded the 3% target ceiling in early October, reaching 4.62% year-on-year, below analyst estimates of 4.74%. Monthly inflation slowed to 0.32%. The central bank targets 3% with a 1.5 percentage point tolerance band.
In the Oct. 4 first-round vote, Flávio Bolsonaro defeated President Luiz Inácio Lula da Silva, making him the strong favorite to win Sunday's runoff. Economic angst and a Supreme Court fraud scandal have fueled anti-system sentiment, amplifying the right-wing challenger's message. However, the race has tightened in final weeks, with polls showing a dead heat.
Lula's supporters staged massive rallies while the Senate approved abolishing Brazil's six-day workweek, one of the president's signature proposals, providing late momentum. Brazilian assets rallied on a potential Bolsonaro victory, with investors viewing the 45-year-old senator as more likely to rein in spending. The central bank has cut the benchmark Selic rate to 13.75%, but fiscal fears under Lula have added inflation pressures.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing