Fed to announce reduction in US stimulus billions on Wednesday

Investors and economists around the world await this Wednesday (3) the end of the two-day meeting of the Federal Reserve (Fed), the central bank of the United States, in which the organ should keep the country’s interest rates close to zero.

It is widely expected, however, that the start of the reduction of its billion-dollar stimulus package that has been in place since the beginning of the pandemic last year, as already indicated by the Fed’s directors, will be announced.

There are US$ 120 billion injected every month in purchases of assets in the financial market, a repeated measure of the 2008 crisis, so that the markets do not stop turning.

The stimuli should be gradually withdrawn over the next few months, and the expectation is that, once they are zeroed, interest rates may rise again in the middle of next year.

They were reduced to a band of 0% to 0.25% in March 2020, in the most aggressive cuts in US bond yields since the financial crisis of the past decade.

Among those largely responsible for the rapid and vigorous warming that stock exchanges around the world saw after the coronavirus crash last year, the withdrawal of stimulus in the United States must now, in the opposite way, start to reduce the abundance of global money and cool risk appetite.

And it is stock exchanges, currencies and emerging economies, such as Brazil, that tend to suffer most from this.

The consequences would be things like bearish waves on the Ibovespa, the rising dollar and the pressure for our Central Bank to raise local interest rates more – which has already started to happen in the domestic market, in a mixture of international factors, such as this one, and internal ones .

Behind the Fed’s move to start backing down with its extraordinary stimulus combo is mainly the pressure of inflation, which is currently running close to 5% in the United States, to a target that should be 2%.