Ernesto Revilla, managing director and head of Latin America economics at Citigroup: “The credit slowdown, now evident in the Brazilian data since a few months ago, is the natural and expected consequence of tight monetary policy. Indeed, the Central Bank of Brazil (BCB) has increased interest rates to 15 percent in nominal terms (close to 10 percent in real rates considering inflation that hovers around 5 percent) precisely to engineer a slowdown in the economy to reduce the pressure in inflation to help it converge to the 3 percent target. Given that inflation is still higher than the target, we expect interest rates to remain higher for longer, with additional implications for the credit market. Many indicators of the credit market are deteriorating: spreads are increasing, household debt is at elevated historical levels and the delinquency rate is trending higher. All of this implies that…”