Central Bank must be a State institution, not a government institution, says BC director – 02/08/2023 – Market

In the midst of recent tensions between the Lula government and the Central Bank, the director of the autarchy’s monetary policy, Bruno Serra, made this Wednesday (8) a forceful defense of the bank’s autonomy, emphasizing that it favors society by allowing the monetary authority to make technical decisions, without interference from political cycles.

“The Central Bank is meant to be a state institution, not a government one,” said Serra during a lecture at a business event in Macaé (RJ).

“The Central Bank’s autonomy benefits us, it benefits society, by segregating the political cycle from the economic cycle. The economy does not obey the political cycle.”

Serra, whose mandate ends at the end of this month, reiterated the argument in the last minutes of the Monetary Policy Committee on the importance of anchoring inflation expectations, which he classified as the BC’s main challenge at the moment.

“Until a few months ago, agents understood that the target was credible, they thought that at least in 2025, 2026, the Central Bank would be able to deliver, but recently we had an increase in longer expectations, which needs to be understood”, Sierra said.

He stated that there can be no leniency by BC.

“A central bank that does not have the credibility to deliver the target, whatever target it is set for, is bad for society, it is bad for the government,” said the director, adding that this increases the cost needed to reduce the inflation.

Serra’s statements come after successive attacks by President Luiz Inácio Lula da Silva and other members of the federal government on interest rates, the autonomy of the Central Bank and the president of the autarchy, Roberto Campos Neto.

The day before, Campos Neto had already indirectly reacted to the criticism by saying that the autonomy of the Central Bank is important because it disconnects the monetary policy cycle from the political cycle.

Serra argued that the Central Bank board that took the rate to 13.75% is practically the same that reduced the Selic to 2% in the midst of the pandemic and said that the current tightening has taken place amid a global cycle of rising interest rates. fees.

“We are going to have a cycle of monetary easing at some point in the future, when conditions allow,” he said.

The appointment of Serra’s replacement is being seen as an important thermometer of the government’s relationship with the BC, amidst speculation that Lula may give preference to career professionals at the bank, or profiles that may oppose Campos Neto, who worked for years in the financial market before moving to BC in the Jair Bolsonaro administration.