Brazil's upside risk to inflation, implies risks to peak Selic rate

In Brazil, despite the possibility of the base effect leading to inflation moderation in 2016 (our current forecast is 6.3%), structurally higher prices would be difficult to tame in such a short time span particularly when the BRL remains under pressure due to domestic and external reasons and trend inflation is already threatening to surpass the BCB's target ceiling. 

Given this situation, the upside risks to the cyclically peak Selic rate forecast of 14.50% continue to rise, says Societe Generale.