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however, we will not be surprised if these cut could achieve 0.50%, which is very significant in terms of resuming the economy, demonstrating the new trend of interest rate reduction. and given that inflation is down from about 12% to, as you say, the current rate of about 3%, some may ask why the central bank can't be more aggressive in its rate cutting. what is your assessment of why they may not go further? it's very important to analyze the composition of these inflation. of course, the average inflation is just close these last months of 3.19%. however, if you look down on the disaggregated blocks,
ruthless in its rate cutting. why do you think it may not do that? you are riaht, you think it may not do that? you are right. the _ you think it may not do that? mm are right, the headline rate of inflation has come down to 3.2% in the latest meeting in mid—july. this is quite close to the midpoint target the central bank is looking at, 3%. however, core inflation is still higher, so what you see is headline inflation has come down because of false in food prices, fuel prices this year, but core prices are still high. they are still running over 5%, so what we are seeing in brazil, the services sector, the labour market, it is still being quite resilient this year. central banks are looking ahead, so they are looking at inflation expectations. they are trying to guide expectations through inflation over the next 12 months. and in brazil inflation expectations are still running above the 3% target for next year. and they are running just under li%, however this
anymore. they're going to be able to shift it back. and look, if we can agree on anything, we have seen zero inflation from the china tariffs. china has been slashing their prices -- >> so far. but the president delayed tariffs because of concern about prices rising during the christmas season. >> the president made a wise decision listening to business leaders. they said, hey, look, give us 90 days, we're locked into these dollar contracts and after that we're moving our supply chain back home here or over to vietnam or thailand. and that's how china is feeling the pain on this. >> so the president will not reconsider imposing those tariffs? >> we'll have conversations about this as we have been doing, but what i can tell you this is this news today is not breaking news. it's well signaled. breaking news is going to be jay powell telling us the fed is going to engage in more rate cutting because maybe china raised irtariffs and because
months, a year later, markets aren't the only thing that is up. so is the economy. that politically would be helpful to the president. wouldn't it? >> certainly. i think this is one of the reasons why trump was hoping for a larger cut to stimulate the economy ahead of the 2020 elections. this will be a very big issue that republicans are trying to tout. so the economy is strong, harder for democrats and everybody running against not only the president but nationwide and races for congress that things need change in washington. >> look at some instances where we saw a rate cut to start. usually they come in threes. not always. in 84, a rate-cutting came even before alan greenspan. we saw the situation improve for the markets and the economy and led the way for ronald reagan's re-election, that was not much in doubt any why by the time we got to november of 84. the same later on after the
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