Campos Neto says that the framework is ‘in the right direction’ and that BC wants to find ‘structural conditions’ for lowering interest rates

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The president of the Central Bank also said that the National Congress could make some corrections to the text and that it is necessary to improve communication to reassure the markets and guide economic expectations. Roberto Campos Neto participates in an event with investors in London, UK London. He stated that the National Congress can make some corrections to the text of the framework, but that the project is in the “right direction” and that communication needs to be improved to reassure the markets and guide economic expectations. Campos Neto said that the final text of the framework, if approved, has realistic criteria for managing public accounts, and eliminates the “tail risk” of an explosion in public debt. “We need to move forward and explain better so that this can permeate through the markets, so that the inflation expectation improves and so that it opens up space for us to do our job of lowering interest rates”, said Campos Neto. “No central banker likes to raise interest rates (…). So, we obviously want to find the conditions and structure for this to happen, “he said. The economist added that “it seems unfair” to demand large cuts in spending by the government, because this goes against the reality of past years. But the framework fixes one of the main flaws of the old rule, which corrected part of the mandatory spending at a higher pace than the “rising” of the spending ceiling due to inflation. “I have studied all major expenditure items over the last 25 years and the truth is that the country has great difficulty in cutting [gastos]”, said Campos Neto. “When you imagine the trend lines for each specific item, when there are cuts they are conjunctural and not structural. You cut for a while and then go back up. The civil servant salary cut is an example”, he continued.

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