Friction continues between the president Luiz Inacio Lula da Silva and the central bank. According to Mônica Bergamo, from Folha de S. PauloLula considers that Roberto Campos Neto has betrayed the government’s trust and is trying to drag the country into a recession.
Lula and ministers of his government seem to have deposited in the president of the central bank willingness to dialogue and participate in a joint effort so that the Brazil overcome economic problems.
However, in its statement on Wednesday (1), the Monetary Policy Committee (Copom) hardened his discourse in relation to the future of the Selic and pointed out that he should leave the basic interest rate fees at higher levels for longer. The justification is the discouraging of the expectations of inflation in the long term and the fiscal risk.
In their first meeting of the year and also the first since Lula took over, the central bank opted to keep the Selic at the level of 13.75% per annum, where it has been parked since August 2022. This is the highest interest rate since January 2017.
The monetary authority’s message was seen as an affront by Lulawho understood that the central bank would be hampering credit recovery and economic activity. It is worth remembering that Roberto Campos Neto was nominated by the former president Jair Bolsonaro.
Lula vs Central Bank: War foot
Lula returned to criticize the autonomy of the central bank and signaled that it may reverse the independence of the monetary authority with the end of the mandate of Campos Neto in December 2024.
“I want to know what independence was for. I will wait for this citizen [Campos Neto] end his term for us to make an assessment of what the central bank independent”, said Lula in an interview with TV network!on Thursday night (2).
When asked directly about the end of autonomy, Lula he said it could happen, but that it’s irrelevant to him. “This is not on my agenda. What is on the agenda is the issue of interest rates.”
Lula criticized the current level of Selic, which is at 13.75% year-on-year since August of last year. This is the highest level of the basic interest rate since January 2017 and should remain so for a long time.
The president stated that there is no reason for the interest rate to be at 13.75% and that he will start charging central bank.
“The President of central bank You have to explain why interest rates are raised if there is no demand inflation,” he said. Lulawhich claims that inflation of 4.5% or 4.0% in Brazil “is a good size”.
At the beginning of the year, in an interview with GloboNews, Lula stated that “inflation is the way it is and the interest is the way it is” even with the autonomy of the monetary authority.
At the time, he also questioned the inflation target. “You set an inflation target of 3.7% [a meta estipulada para 2023 é de 3,25%] and when it does that, it is obliged to tighten the economy even more in order to reach the goal. Why not 4.5% like we did?”
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