Reading # 17: Brazilian central bank reduced bank reserves, resulting in a lower money supply.
–> I dont get it. Why would the monetary policy result to a lower money supply? Isnt the policy more of expansionary rather than contractionary? Why would this reduce consumption and business investment spending? I also dont get the impact of the policy on fixed income and equity securities. Thanks.
While I have not seen this reading personally, going by what you have written and if taken in isolation, you are right - the reduction in reserve requirements should increase the money supply, which in turn should increase consumption and business investments should increase owing to the readily available capital. Again, this should be true if one takes the statement in isolation.
However, there are other matters to consider such as the policy rate, the effect of money supply on inflation etc. before one can make a definitive statement.
glamper, you and TelcoToVC seem to be thinking (or talking) about reserve requirements when the question really only concerns the level of bank reserves. Remember that the central bank can carry out its monetary policy in one of several ways: fed funds, selling/buying securities, reserve requirements, discount window, etc. When it decides to buy or sell securities from (or to) banks, it increases or decreases the banks’ level of reserves at the Fed. Think of it as the banks’ way to transact with the Fed; just like all of us have bank accounts, all banks have accounts at the Fed.
Now, the finale. When the Fed buys securities from the banks (expansionary), it needs to credit (or add funds to) the banks’ reserves. Conversely, when the Fed sells securities to the banks (contractionary), it needs to debit (or take funds from) the banks’s reserves. Thus, a reduction in the reserves is associated with a decrease in the money supply and a higher interest rate. The higher rate stifles consumption and investment, and depresses bond and equity prices.
Sure. That’s another way of looking at it and most probably the correct one in context of the answer provided by the OP. However, the way the statement is framed and again, I reiterate that I haven’t seen the material yet, it could be interpreted either way - the central bank reduced the reserve requirements or the central bank reduced the reserves of banks by selling securities (part of the OMO). The latter could be easily inferred if the original statement were a little clearer 
Thank you. I get it now.