The light remains green for the Brazilian consumer. In March, inflation came in lower than market expectations (+0.09% compared to February against a consensus at +0.12%). Compared to a year earlier, it slowed down to +2.68% y/y from +2.84% in February. It remains below target (+4.5% +/- 1.5pps). As a consequence of the prolonged decrease in inflation since the fall of 2016, the central bank was able to cut its policy rate (SELIC) twelve times to support the recovery; it now stands a record low of 6.5%. Recent CPI data hence pushes for an additional cut at the central bank’s next meeting in May. Yet, the (returning) cloud in the horizon is political risk: after cheering in January following Lula’s upheld conviction, markets are now pricing in heightened uncertainty ahead of the October presidential elections; the Brazilian real depreciated to its lowest level since December 2016 (BRL/USD 3.42). The central bank could put off a rate cut to avoid further weakening of the currency.