WEEKLY REPORT Geopolitical uncertainty redefines monetary authorities’ assessment – 03/20
✅ In the United States, the FOMC kept interest rates unchanged in the range of 3.50%-3.75% and signaled that the environment of elevated geopolitical uncertainty imposes additional caution for monetary easing in the short term, raising the probability of a higher-for-longer interest rate scenario. The dot plot revealed a significant shift in the distribution of projections, with seven members projecting no cut in 2026 and another seven projecting only one, keeping the median unchanged but shifting the distribution to a higher average level..
✅ In Brazil, the Copom initiated the monetary easing cycle with a 25 basis point cut, below the pace that had been imagined in the period prior to the Middle East conflict tensions, but accompanied by more dovish communication than expected in light of recent developments. Without significant changes in current inflation readings, the BCB altered its projection of IPCA at the relevant horizon from 3.2% to 3.3%, reflecting only partial incorporation of the oil increase in its model, which appears fair to us given the enormous uncertainty about this variable.
