Brazil, the downward bias of inflation expectations

While Brazil inflation acceleration has continued throughout this year and average 2015 inflation projections  have also risen, which are currently heading towards nearly 9.0% as against our forecast of 8.4%, there has been substantial moderation in the 2016 consensus inflation view. 

"While inflation is seen to be moderating in 2016 on a strong base effect, consensus view of inflation is doubtful, which falling close to the BCB's target by the end of 2016", says Societe Generale.

Moreover, year-ahead inflation expectations have been proved widely wrong and inflation is underestimated  almost all the time in the last few years.