Fed Trims Rates to 3.50%–3.75% as Brazil Holds Selic at 15%, Leaving Next Moves Unclear

Overview

• The FOMC lowered the federal funds range by 0.25 percentage point to 3.50%–3.75%, marking a third consecutive cut in 2025.
• The decision was split, with Austan Goolsbee and Jeffrey Schmid voting to hold steady and Governor Stephen Miran backing a larger 0.50‑point reduction.
• The Fed’s projections show wide dispersion and a median path pointing to only one additional cut in 2026, indicating a likely pause in further easing.
• Brazil’s Copom unanimously kept the Selic at 15% and said policy must remain “significantly contractionary for a prolonged period,” offering no timetable for the start of cuts; the bank cited 4.46% inflation and a resilient labor market with 5.4% unemployment.
• Market pricing now implies roughly 15 basis points of easing for Brazil in January, with options showing about a 57% chance of no cut after the Copom’s cautious communication.