Former Central Bank director and economists add to criticism of Selic at 13.75%

Criticism of the maintenance of the basic interest rate at 13.75% by the Central Bank has gained new voices in recent days, such as the former director and one of the “fathers” of the Real Plan, André Lara Resende, and economists such as the former minister da Fazenda, Luiz Carlos Bresser-Pereira, and the former president of the National Bank for Economic and Social Development (BNDES), Luciano Coutinho.

They join the chorus led by President Luiz Inácio Lula da Silva (PT) since the beginning of the new government against the decision of the Monetary Policy Committee (Copom) that kept the Selic at this level in the last meeting, held at the beginning of the month.

André Lara Resende, who was recently nominated for the position of coordinator of the BNDES Strategic Studies Commission, said that it makes no sense for the interest rate to be “at this level two years ago”, which makes it impossible to stabilize inflation.

“The objectives of the Central Bank, determined in the law that gave autonomy to the Central Bank, are the control of inflation, the stability of the financial system and the closest possible guarantee of full employment. Obviously, this interest rate of 13.75%, 8% in real terms, is incompatible with these objectives. She is wrong”, he told Band’s Canal Livre program, which will be shown this Sunday (12) and which had an excerpt published on social networks (see in full).

Despite saying that the interest rate has been “at this level for two years”, the Selic was raised above 10% in February last year, when it went from 9.25% to 10.75% and started the upward trajectory until reach 13.75% in August, which remains until today. According to the historical series of the Central Bank, two years ago the basic interest rate was 2%. (look here)

Economists launch manifesto for BC to lower Selic

The chorus against Copom’s decision was joined by a manifesto published in the form of a petition this weekend, headed by Bresser-Pereira and Coutinho together with Nelson Marconi, professor at the Getúlio Vargas Foundation (FGV) and coordinator of the government’s Ciro Gomes (PDT) in last year’s presidential election, and Antônio Correa de Lacerda, member of the Superior Economic Council of the Federation of Industries of the State of São Paulo (Fiesp), among others.

In the manifesto, economists claim that interest rates in Brazil have “been exaggeratedly high by the Central Bank, and are now at unacceptable levels”, and that the monetary authority’s discourse finds no justification in economic theory or in the international scenario.

“None of the countries endowed with resources and structured economies has an interest rate even close to that prevailing in Brazil and which the Central Bank intends to maintain for a long period. And all these countries recognized the extremely exceptional character of the recent inflationary surge, explained by the pandemic and the military conflict, not by excess demand”, says the manifesto. (see in full)

The document also states that maintaining the interest rate at high levels causes a “strangulation of productive and creative activities”, reflecting on the difficulty for companies to invest to increase production and productivity, jobs and services provided to the population.

“Without this, investments will lose out to financial applications and wages for work and production will lose out to speculation”, portrays the text.

Economists recognize that the Brazilian economic moment requires caution, but that this does not mean “conforming to sterile paths”. For them, it is necessary to observe what other countries are doing to apply internally.

At the end of the manifesto, the economists “publicly declare their support for a policy capable of substantially reducing interest rates, providing the conditions for the resumption of development with sustainable stability”.

Until the afternoon of this Sunday (12), the manifesto already had 2,060 signatures.

Over the last week, the president’s allies began to increase their criticism of the Central Bank, attributing to President Roberto Campos Neto the decision not to lower the Selic rate.

On the other hand, the Minister of Finance, Fernando Haddad, adopted a more moderate tone, stating that the monetary authority is beginning to understand the fiscal adjustment plan proposed by the government – ​​which should influence future Copom meetings.