August 19, 2022
EUA Unsplash

Fed decision, IBC-Br and what else you need to know to invest well on Wednesday

Today is the last big event with a fixed and appropriate date for the global financial market. At 4 p.m. (GMT), the Federal Reserve, the central bank of the United States, It will reinforce that the ample supply of cheap dollars will expire faster than previously thought. A little later, at 4:30 p.m., the president of the foundation, Jerome Powell, will comment on the announcement.

The enterprise is expected to move in two specific directions:

Less money for the economy: Last month, the US central bank warned that it would reduce the volume of debt securities purchased from the financial market. $120 billion was acquired in October, which increased to $105 billion in November and $90 billion in December. The consensus is that the pace of this reduction will double, from $15 billion to $30 billion per month.

Higher interest in 2022: The last time it detailed the institution’s interest rate estimate, in September, the Fed showed that half of the 18 MPC members advocated keeping the rate between zero and 0.25% annually through the end of 2022. At least, most of them will start In defense of an interest rate hike next year.

The market will react according to the severity of these two metrics. If the signs are for smaller money injections into the economy or higher interest rates in 2022, the trend is for the dollar to rise and stock prices to fall in the US and Brazil. If decisions go in the opposite direction, the movements are reversed – the dollar falls and stock prices rise.

Read more:
TradeMap explains: What is the relationship of the Federal Reserve Bank of British Columbia to the USA, with the Brazilian market?

It should be noted that in addition to the almost universal signs that monetary policy will be tightened tomorrow, the economic scenario in the US makes it unlikely that the US central bank will deal with the matter tomorrow.

Inflation in the country ended the 12 months ending in November at 6.8%, the highest since March 1982. For historical curiosity, as context is not comparable, at the time, interest rates in the US economy were close to 15% each year.

Other highlights

Long before the Fed’s announcement, our central bank will release, at 9:00 am, the IBC-Br. Anticipation is another negative consequence, given the poor performance of industry, Act selling by pieces e do Services sector in October compared to September.

On the political front, the Chamber of Deputies advanced last night in approving parts of the PEC dos Precatórios that have not yet been issued. In the proposal they kept the deadline until 2026 for the validity of this debt repayment limit – a change that was incorporated into the text in the Senate. The Chamber defended for the long term – until 2036.

Today, MPs will continue to vote, starting at 10 a.m., on so-called “text highlights” – proposals that attempt to amend certain parts of the legislation. Yesterday, two of those highlights were rejected, and there are three more waiting to be considered. If the remaining text of the PEC dos Precatório is enacted later this year, the government will have an additional space of about R$110 billion to spend next year without breaking the spending cap.