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Brazil faces threat of “light” stagflation

RIO DE JANEIRO, BRAZIL - Brazil is heading toward "stagflation" as the economy teeters on the brink of recession and inflation soars above the official target for the year, leaving the Central Bank (BC) in an increasingly difficult position.

How can the monetary authority deal with price pressures without causing additional damage to an economy ravaged by one of the world's most lethal Covid-19 epidemics?

"In part this is happening in Brazil because higher production costs are putting pressure on inflation and affecting economic activity," said Caio Megale, chief economist at XP Investimentos and a former member of Paulo . . .

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