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Brazillian-American Chamber of Commerce September - 2011

Brazillian-American Chamber of Commerce September - 2011. Marcelo Fonseca M. Safra & Co – money managers . Recent spike in inflation is NOT a supply (commodity) shock . 2. It is a response to tighter labor markets and the cyclical upswing. Unemployment rate. SA. Original. Source: IBGE. 3.

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Brazillian-American Chamber of Commerce September - 2011

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  1. Brazillian-American Chamber of CommerceSeptember - 2011 Marcelo Fonseca M. Safra & Co – money managers

  2. Recent spike in inflation is NOT a supply (commodity) shock ... 2

  3. It is a response to tighter labor markets and the cyclical upswing Unemployment rate SA Original Source: IBGE 3

  4. ** Fiscal policy strongly expansionary in 2012

  5. Legislative risks for fiscal policy • Renewal of the “DRU” (de-earmarkimg of the budget) • PEC 300: nationwide floor for the salary of police officers and increase in salaries of the judiciary system • 29th Amendment: mandatory healthcare expenditures for municipalities • Proposal to eliminate the “fator previdenciário” (mechanism that reduces the value of the pensions for early retirees)

  6. Wrong diagnosis & optimistic assumptions: BCB’s forecasts underestimate actual inflation 6

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