LatAm Brief: Fed lowers rates aggressively, whilst BCB hikes

19 SEPT 11:30GMT: LatAm FX is expected to open firmer on Thursday against a greenback that has slipped towards DXY100.500 following the FOMC meeting yesterday evening, where policymakers ignited a monetary easing cycle with a 50bps rate cut, bringing interest rates down to a 4.75-5.0% range in line with market expectations, although most economists f/c a 25bps move. Fed Bowman dissented in favor of a 25bps cut, 9 members penciled in 75bps or less of cuts this year but 10 penciled in 100bps or more. Fed Chair Powell said no one should see the 50bps cut as 'the new pace', they were not declaring victory on inflation and that his own sense was they were not going back to a low neutral rate. USD/MXN is down 0.57% in early trade, although has pulled itself up a touch to 19.1735 at writing from an early session low of 19.1426. Also in the spotlights yesterday was the BCB rate decision, which saw the central bank raise interest by 25bps to 10.75% and signaled more to come on resilient growth and CPI expectations, bucking the wider global trend of lower monetary policy. That should see the BRL gain on Thursday on top of the already risk-on sentiment seen in global markets following the Fed.

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