What happened
US currency advanced with stronger inflation in the US. Data from Thursday (25) showed that United States economic growth slowed more than expected in the first quarter, but an acceleration in inflation suggests that the Federal Reserve will not cut interest rates anytime soon.
US Gross Domestic Product expanded at an annualized rate of 1.6% last quarter. The information is from the Department of Commerce. Economists polled by Reuters had forecast growth of 2.4%, with estimates ranging from a 1.0% pace to a 3.1% rate. Putting pressure on markets, data showed that the core PCE price index accelerated to 3.7% in the quarter, above expectations of 3.4%.
Global markets have experienced a wave of risk aversion recently. Resilient US data and tough talk from Fed officials led traders to predict just two cuts of 0.25 percentage points in US interest rates in 2024. Between the end of 2023 and the beginning of this year, markets even bet on up to 1.50 percentage points of monetary easing in the period.
Today’s robust indicator and corporate agenda guided Ibovespa. External uncertainty added to local fiscal risks and has affected monetary policy prospects, with the president of the Central Bank, Roberto Campos Neto, warning that there could be a slowdown in the pace of easing, which led to an increase in market projections to the Selic level at the end of this year.
Slow pace is positive for the real. In theory, a slower pace of monetary easing in Brazil would be positive for the real, as this would better preserve the profitability of the fixed income market, attracting foreign investors.
Tags: Dollar rises reaches R5 .162 data Stock market remains stable
