Fed Lowers Rates Again as Brazil Holds at 15%, Signaling Split Policy Paths

Overview

• U.S. policymakers cut the federal funds target by 0.25 percentage point to 3.50%–3.75%, marking a third reduction this year.
• The decision showed division, with two votes to hold and one favoring a larger 0.50 point cut, while Chair Jerome Powell said inflation and employment prospects have changed little since October.
• The Fed’s dot plot places the 2026 median at 3.4%, implying just one additional quarter-point cut next year and underscoring a data‑dependent approach.
• Brazil’s Copom unanimously kept the Selic at 15% for a fourth meeting and stressed that policy must stay significantly contractionary for a prolonged period given external uncertainty and a resilient labor market.
• Consultancies put Brazil’s real interest rate near 9.44%, the world’s second highest, as political debate intensifies and the next Copom and FOMC meetings are scheduled for Jan. 27–28, 2026; separately, President Donald Trump and adviser Kevin Hassett signaled preferences for further U.S. easing in discussions over Fed leadership.