Fed Hikes, Copom Cuts: The Rare Interest-Rate Divergence Between Brazil and the United States

On the same day, September 16, 2026, Brazil’s central bank cut the Selic rate from 14% to 13.75% a year, while the Federal Reserve raised U.S. rates from a range of 3.50% to 3.75% to a range of 3.75% to 4.00%. Central banks in the two countries rowing in opposite directions, in the same week, is uncommon, and it has a direct effect on anyone moving money between the two countries.

What each side decided

In Brazil, the Copom decision was unanimous and had already been expected by 75 of the 78 firms surveyed by the market. It was the committee’s 281st meeting, and the median Focus survey projection puts the Selic at 13.75% at the end of 2026, with room for further gradual cuts in 2027 and 2028 if inflation continues to behave. The next Copom meetings are set for November 3–4 and December 8–9.

In the United States, the Fed raised the rate range to 3.75% to 4.00% a year, a unanimous decision under the new chair of the U.S. central bank, Kevin Warsh, and signaled the possibility of one more increase still in 2026, given inflation that remains stubborn and a labor market still considered solid.

What this divergence changes in practice

The interest-rate differential between the two countries is still wide (the Selic remains well above U.S. rates), but the direction has changed: in Brazil, the cycle is one of gradual cuts; in the United States, the cycle has turned back to hikes. That tends to keep the real under pressure in the short term, because higher U.S. rates increase the relative appeal of dollar assets and can reduce the appetite for holding positions in reais.

For companies with revenue in one currency and expenses in another, the moment calls for reassessing the cost of currency hedges, since the rate differential is one of the main components of the price of FX futures. For anyone deciding whether to raise capital in Brazil or in the United States, it is worth comparing the total cost of each option considering not only the nominal rate, but the expected exchange rate over the life of the financing.

Finally, it is worth following the Copom minutes, released a few days after each decision, and the FOMC statements, which usually offer clearer clues about how long these moves will last than the decision itself.