Brazil’s unemployment falls again, sparks inflation fears

Brazil’s unemployment rate continued its downward trend in June, marking the third consecutive month of decline, data from statistics agency IBGE showed on Wednesday.

The unemployment rate fell to 6.9 per cent, from a month earlier. This translates to approximately 7.5 million unemployed Brazilians.

The robust job market has increased speculation that the Central Bank of Brazil (BCB) may maintain its high-interest rate policy during its meeting later today.

Bloomberg economists warn that while the strong labour market is positive news, it could also fuel inflationary pressures, particularly in the service sector.

“Brazil’s labour market continued to tighten in June and wage gains remained strong. That will keep the central bank alert for possible inflationary pressures, especially in the services sector. The data don’t change our expectation for a rate hold on Wednesday, but policymakers may adopt a more hawkish tone in their post-meeting statement.” economists noted.

Source: Bloomberg & Instituto Brasileiro de Geografia e Estatística (IBGE)