October 2021

One of the most relevant issues for financial markets has been the discussion on how temporary inflation is affecting several countries, developed and emerging.

The worsening in inflation data can be attributed to shocks in the supply chain and reopening of economies. The sronger-than-expected persistence of inflationary pressure has led the main central banks to adopt stricter monetary policies than previously proposed.

The deterioration of the fiscal framework also had repercussions on monetary policy decisions in Brazil, with the BC opting to accelerate the hikes in the interest rate.

Despite the favorable external scenario, uncertainties in the fiscal scenario strongly impacted domestic risk assets, including the stock market – the Ibovespa had another month of declines, despite the strong performance of global stock markets, including emerging countries.

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