Business · Markets · 7 hrs ago
Democratic control of Congress could affect Brazil’s dollar and interest rates
The US midterm elections could affect Brazil’s currency and interest-rate outlook, according to economist Gabriel Monteiro.
Democrats could take control of both houses of Congress, which are currently controlled by Republicans.
That could make it harder for President Donald Trump to advance his economic plans, including proposed tax cuts and a $5,000 payment to each US adult.
Congressional resistance could ease pressure on US borrowing costs, which are already high, and improve market expectations.
Democrats might also push to reduce funding for the conflict with Iran; if that helped lower oil prices, interest rates could fall in the US and Brazil.
But the dollar’s value in Brazil also depends on the country’s own public finances and economic outlook.
Brazil’s fiscal policy remains the bigger local influence, Monteiro said, while the economy is showing signs of slowing next year.
A Democratic takeover of both chambers of the US Congress could affect Brazil’s dollar exchange rate and interest-rate expectations, CNN Brasil analyst Gabriel Monteiro said.
Monteiro said congressional opposition could make it harder for US President Donald Trump to advance his economic agenda.
A reduction in funding for the conflict against Iran could potentially ease the conflict and lower oil prices, which could put downward pressure on interest rates.
Monteiro said Brazil’s own fiscal policy and economic conditions matter more to the dollar’s movement in Brazil than US expectations.
- Who
- US Democrats and President Donald Trump are at the center of the political scenario. Brazilian markets could also be affected.
- What
- A possible Democratic majority in both chambers of Congress could influence the dollar and interest-rate expectations in Brazil.
- When
- Not stated
- Where
- The United States and Brazil.
- Why
- A Democratic-controlled Congress could constrain Trump’s economic agenda and possibly affect conflict funding, oil prices and interest rates.
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- Congressional scenario
- Democrats could take control of both the House of Representatives and the Senate.
- Current control
- Republicans currently dominate both chambers, according to the article.
- US debt
- US$40 trillion, having doubled in 10 years.
- US deficit
- About 5% of GDP.
- Proposed payment
- Trump is considering a US$5,000 check for each adult in the United States.
What people are saying
More than these US expectations, what will happen with our fiscal policy here and with our economy, which is showing signs of slowing next year, matters.
A drop in oil prices could favor lower interest rates in the United States or even lower interest rates here in Brazil.
Just having this resistance in the House and Senate could make it harder for Donald Trump to apply this economic agenda, which would bring better expectations in the financial market, eventually lower futures interest rates, which could affect us too.
It may be so, mainly because of the political pressure Donald Trump could face to apply his agenda.