The dollar dropped another notch and began trading at around R$4.98, in line with the global movement of the American currency following the announcement of the monetary policy decision by the Federal Reserve, the central bank of the United States. As expected, the US Central Bank kept the base rate in the range between 5.25% and 5.50%. In the statement, the Fed repeated that it will not be appropriate to reduce interest rates until there is more confidence that inflation is heading sustainably towards the 2% target.
Short Treasury rates fell and risk assets gained momentum with the maintenance of the projection of three interest cuts of 0.25 percentage points of the basic rate this year, according to the median of estimates. In the so-called dot chart, nine leaders project the base rate between 4.50% and 4.75% in December. On the other hand, the Fed raised its projections for inflation and growth this year.
There was an even greater deepening of the dollar’s losses, which renewed its minimum at R$4.9719, during statements by Fed president, Jerome Powell, at a press conference, closing the day at R$4.9744.
Powell hinted at the possibility of interest rate cuts this year, although he stressed that officials did not speak this Wednesday of a specific month for the first reduction, and downplayed the most recent inflation readings. “We are not going to overreact to a specific piece of data,” said the president of the North American BC.
The partner and managing director of Azimut Brasil Wealth Management, Leonardo Monoli, notes that the Fed revised upwards the expected interest rate at the end of 2025 and 2026, but maintained the expectation of cuts of 75 basis points this year, which brought relief to the market.
“Powell commented that, although employment and hiring are still strong, this should not be seen as a reason to postpone interest rate cuts. There is the impression that they want to adjust the level of real interest rates, as they do not need to continue with the same level of tightening for a long time”, says Monoli, remembering that the president of the American Central Bank also commented that it would be appropriate to soon reduce the rate of reduction. of the institution’s balance sheet.
Monitoring by the CME Group shows that, after the Fed’s decision, the chances of a US interest rate reduction in June rose and once again exceeded 70%. The scenario of accumulated cuts of 75 basis points throughout the year remained the most likely.
At the end of local trading, the DXY index – which measures the dollar’s performance against six strong currencies – fell 0.41%, to 103.417 points, with a minimum of 103.379 points. The American currency fell compared to most emerging currencies and commodity exporting countries, with greater losses compared to the South African rand and the Mexican peso.
Monoli, from Azimut, states that maintaining the scenario of the start of the monetary normalization process this year, with a cut of 75 basis points in the period, “supports the maintenance of a moderate risk allocation”, with “stock markets up and dollar and interest rate curves in emerging markets in Brazil falling at the margin”. This trend, notes the manager, could be “increased over the next few months, depending on the next rounds of employment, activity and inflation data in the US”.
Here, the unanimous expectation is that the Monetary Policy Committee (Copom) will announce this Wednesday night a new reduction in the Selic rate by 0.50 percentage points, to 10.75% per year. Attention is focused on the statement, given recent speculation that the Central Bank committee may change the “forward guidance” of 0.50 point rate cuts “in the next meetings”.
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