Downward bias of Brazil inflation expectations

While inflation acceleration has continued throughout this year and average 2015 inflation projections (both our own and consensus) have also risen (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 as moderating in 2016 on a strong base effect, it is not 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 analysts have underestimated inflation almost all the time in the last few years.