FX.co ★ Brazilian Real Hover at Mid-2024 Highs After Copom

In September, the Brazilian real reached approximately 5.3 against the US dollar, marking its strongest position since June 2024. This shift comes as investors responded to recent monetary policy decisions by both the US Federal Reserve and the Brazilian Central Bank. The Federal Reserve reduced interest rates by 25 basis points, with Chair Jerome Powell indicating that the adjustment served as a "risk management" measure, rather than signaling the onset of a new easing cycle. Powell highlighted that the threat of higher and more persistent inflation has diminished since April. Interestingly, only the newly appointed Fed Governor, Stephen Miran, cast a vote for a more substantial 50 basis point reduction, leading to fewer disagreements among officials than the market had predicted. Meanwhile, the Central Bank of Brazil opted to keep the Selic rate steady at 15%, maintaining its hawkish approach to managing inflation. Recent economic indicators have shown a slowdown in growth, yet inflation levels remain controlled, enabling the central bank to uphold a stringent policy.