The dollar opens lower with inflation in the United States, Galípolo and the budget

The dollar was trading lower this Thursday morning (12/18), during a day loaded with national and international economic news.

Investors are reflecting on official US inflation data for November. The Consumer Price Index (CPI) is published by the Ministry of Labor.

In Brazil, market attention is divided between the Monetary Policy Report (MPR), published by the Central Bank (CB), and the press conference of the president of the monetary authority, Gabriel Galípolo, on the BC’s projections for the Brazilian economy.

Also this Thursday, the National Congress is expected to hold its last session of the year, voting on the Annual Budget Bill (PLOA) for 2026.

Dollar

At 9:07 a.m., the US currency fell 0.19% and was trading at R$5.512.
The day before, the dollar ended the session up 1.09%, quoted at R$5.531.
As a result, the American currency accumulated gains of 3.5% over the month and losses of 10.6% over the year against the real.

Ibovespa

Trading on Ibovespa, the main index of the Brazilian Stock Exchange (B3), begins at 10 a.m.
The day before, the indicator closed the session down 0.79%, at 157.3 thousand points.
As a result, the Brazilian Stock Exchange accumulates a decline of 1.1% in December and an appreciation of 30.8% in 2025.

Inflation in the United States

The main highlight of this Thursday for the markets is the publication of data on consumer inflation in the United States. The indicator is considered one of the most important for defining the base interest rate by the Federal Reserve (Fed, the North American Central Bank).

According to average estimates by market analysts, inflation in the United States should be 0.3% (on a monthly basis) in November and 3.1% (on an annual basis).

At the latest meeting of the Fed’s Federal Open Market Committee (FOMC) last week, the interest rate cut was 0.25 percentage points, in line with most market analysts’ projections. Today, interest rates are between 3.5% and 3.75% per year.

This is the third consecutive reduction in interest rates by the US Central Bank. At the previous Fed meeting in September, the drop was also 0.25 percentage points.

The vote was not unanimous. Stephen Miran, a new Fed member appointed by Donald Trump, voted for a larger cut of 0.5 percentage points, while Jeffrey R. Schmid and Austan D. Goolsbee voted to leave the interest rate on hold.

The next meeting of the monetary authority to define the interest rate, the first in 2026, is scheduled for January 27 and 28.

The base interest rate is the main instrument of central banks to control inflation. When the monetary authority maintains high interest rates, the goal is to contain high demand, which is reflected in prices, because higher interest rates make credit more expensive and encourage saving. So, higher rates can also dampen economic activity.

Still on the international scene, investors are also considering the monetary policy decisions of the Bank of England (BoE) and the European Central Bank (ECB), which announce new interest rates.

Galipolo and Central Bank Report

The BC revised upwards its growth projections for the Brazilian economy in 2025 and 2026. For this year, the last forecast was growth of 2% and, now, 2.3%. Compared to 2026, the last outlook was for 1.5% growth in the economy, but this has increased to 1.6%.

The previous change, published in September, was a 2% increase. The statistics are part of the Monetary Policy Report (MPR), published this Thursday.

Last year, British Columbia announced a change in the nomenclature of the Quarterly Inflation Report (TIR), now the Monetary Policy Report (MPR). According to the monetary authority, the change comes to align with “international practices”.

The templates for the monetary policy report are the same as those for the inflation report.

The MPR brings together the monetary policy decisions adopted by the Monetary Policy Committee (Copom), as well as the performance of the new inflation targeting system, considerations on the evolution of the economic scenario and inflation projections.

Starting this year, the BC must publish, before the last working day of each quarter, the monetary policy report.

The market also follows the statements of the president of the BC, Gabriel Galípolo, who holds a press conference on the projections of the report of the monetary authority, in Brasilia.

Currently, the basic interest rate of the Brazilian economy (Selic) is 15% per year. This is the highest interest rate level in the country in almost 20 years, since 2006.

Budget vote

The National Congress has scheduled the vote on the annual finance bill (PLOA) for 2026 on Thursday, starting at 12 p.m. If the text is approved, the government of President Luiz Inácio Lula da Silva (PT) will be able to complete the vote on the budget before the deadline for the fiscal year.

The rapporteur of the proposal, MP Isnaldo Bulhões (MDB-AL), has not yet published the report. Before the plenary, the text must be voted on in the joint budget committee (CMO). The President of Congress, Senator Davi Alcolumbre (União Brasil-AP), said that the session could be postponed until Friday (12/19) to complete the analysis.

In addition to the budget proposal, other bills of the National Congress (PLN) must also be analyzed. Among them is PLN 6/2025, which allocates 8.3 billion reais for the creation of the Tax Benefits Compensation Fund, provided for in the tax reform.

Another item on the agenda is PLN 18/2025, which opens an additional credit of BRL 3 million to Companhia Docas do Ceará. The resources will come from the cancellation of other credits and will be used to purchase equipment and carry out nautical maneuverability and navigability studies for the reception of container ships.

The LDO (Budget Orientation Law), prior to the vote on the Budget, was approved on December 4. The text obliges the government to pay for the majority of the amendments by June 2026, three months before the legislative elections.

According to the agreement reached, the government must pay 65% of the mandatory amendments in the first half of the year, by July, which is equivalent to around 13 billion reais. Individual amendments, bench amendments and so-called Pix amendments fall within this rule.

Another favorable point for the government’s economic team and, therefore, for the Budget was the approval, this Wednesday (16/12), of the Complementary Draft Law (PLP) which provides for reductions in tax benefits.

The measures are expected to guarantee a total collection of 22.45 billion reais. Of this amount, R$17.5 billion will come from the reduction of tax benefits, R$1.6 billion from fintech taxation, R$2.5 billion from the increase in taxation on interest on equity (JCP) and R$850 million from the increase in taxation on sports betting (betting).