On the eve of the decisive Wednesday in December, in which the monetary committees of Brazil and the United States will make their decisions on interest rates , recent inflation data were released in both countries.

Image source: IBGE

In Brazil, inflation came in at 0.28% below the average market expectation, which was 0.3%. Therefore, if everything remains the same, over the next 12 months, we can expect inflation of 3.5% per year. This will help COPOM reduce the interest rate in the Brazilian economy, which, in real terms, is one of the highest among nations.

Which products still show resistance to rising prices?

Beverages, transport and housing are the items that weighed most on inflation in November.

What to expect for inflation next year in Brazil?

We understand that containing inflation requires a coordinated effort, both on the part of the government, by reducing its spending, and on the part of companies, by moderating their economic activity . In this scenario, it is possible to infer that next year will witness moderate growth in the Gross Domestic Product (GDP), considering the expectation that inflation will remain in line with the targets established by the Central Bank.

How is inflation in the United States?

Now, heading to the largest investment port in the world, the United States. There, the Core CPI or central inflation was in line with analysts' expectations, remaining at 0.3% for the month of November. If we accumulate this value 12 months forward, making a very simple projection, we can see that the projected inflation would be 3.66% per year. The market will react well to this November inflation number; However, I see that additional efforts can be expected to have inflation in the middle of the 2% target in the US. With this, I believe that the FED will not escape another interest rate adjustment next year.

What to expect for inflation next year in the United States?

Economic cycles last 8 years , according to my calculations, these cycles end in 2024. Am I right? Probably not, but remember that you don't have to be right to make money in this market , as long as you are less wrong than others.

Do you already have an inflation forecasting system in your investment fund ?

Contact Wagner Geremia to learn more.

Article Cover Image Source: Investing BR