Continued deterioration in Brazil's macro economy and financial conditions

Both the macro economy and financial conditions of Brazil have further deteriorated since the September Copom meeting. 

On the growth front, August retail sales and labour market developments were worse than expected which puts further downside risk on their recently revised growth forecast, argues Societe Generale. 

On the fiscal side, mounting domestic political and legislative concerns coupled with constraints on the revenue side mean that the fiscal targets will be missed by a wide margin both in 2015 and 2016, added SocGen. This is bound to put further pressure on financial conditions.