Lack of details keeps banks cautious about Bolsonaro’s plans

Despite the financial market’s initial euphoria with the first-round results of the elections, executives at retail banks are cautious about a possible administration of Jair Bolsonaro (Social Liberal Party, PSL). They consider that, even though the candidate’s proposals for the economy point to the direction they consider correct, there is still little clarity about how they will be implemented.

Mr. Bolsonaro has the benefit of the doubt, even because the sector rejects the economic policy adopted in the administration of Dilma Rousseff, who is of the same Workers’ Party (PT) of runoff contender Fernando Haddad. Yet six bankers who spoke with Valor — especially those linked to the lending market — expect more details of the measures and reckon the real economy will take time to react in a more consistent way.

Inflation trending higher amid stronger dollar, oil prices

Some economists already expect inflation to come in slightly above the target this year due to the effect of a stronger dollar on the real and higher oil prices. The Brazilian Institute of Geography and Statistics (IBGE) reported Friday a 0.48% rise in official gauge IPCA in September, following a 0.09% decline in August. The index advanced 4.53% in the 12-month period ending in September, while the Central Bank’s official target is 4.5%. Itaú Unibanco says the weaker exchange rate is affecting wholesale prices more intensely and may put additional pressure on consumer prices over the next few months.

IPCA up 0.48% highest rate since September 2015

The IPCA inflation index closed the month of September up 0.48%.
In 12 months the IPCA rose 4.53%, higher than the 4.19% up to last month. The expectation was for a rise of 4.45%. This year's inflation target is 4.5%, plus or minus 1.5%.