Galípolo in BC: what to expect from Haddad’s former number 2 in the Monetary Policy Board

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Economists heard by the g1 believe that Galípolo will be a mediator between fiscal and monetary policy, in addition to defending the fall of the Selic — but not necessarily a ‘PT name’ in the institution. Gabriel Galípolo, appointed to the BC’s board of directors, was questioned by senators this Tuesday (4) Ton Molina/Fotoarena/Estadão Content The Senate approved this Tuesday (4) the nomination of Gabriel Galípolo, former executive secretary of the Ministry da Fazenda, for Director of Monetary Policy of the Central Bank of Brazil. The name chosen by the Lula government (PT) was accepted by 39 votes to 12. Considered a moderate heterodox economist, the former number 2 of Minister Fernando Haddad (Finance) takes office amid strong friction between the top of the federal government and the current president of the Central Bank, Roberto Campos Neto, appointed to the position by former president Jair Bolsonaro (PL). One of the main critics of Campos Neto’s economic policy at the head of BC is President Lula himself. The conflict is centered precisely on the basic interest rate, currently at 13.75% per year — a level considered high and which, according to the PT’s repeated statements, hinders the country’s growth. READ MORE: Lula says that Campos Neto ‘plays against the Brazilian economy’ Lula returns to demand interest rate cuts and says that Campos Neto needs to explain himself Lula mocks Campos Neto: ‘You can talk about everything, you just can’t talk about interest’ the g1 believe that Galípolo will be a kind of mediator between fiscal and monetary policy, in addition to defending the fall of the Selic — but not necessarily a “name of the PT bench” in the institution. For Alexandre Espirito Santo, chief economist at Órama and professor at Ibmec-RJ, Galípolo has the necessary qualifications to occupy the BC’s board of directors. “I believe that, as he himself pointed out, he will play the ‘midfield’ between fiscal and monetary policy. Minister Haddad has been talking about this harmony between fiscal and monetary policy all the time. Treasury — being one of those responsible for formulating the new fiscal framework — he can collaborate in this task”, he says. The economist believes that Galípolo tends to be a great advocate of faster and stronger falls in the Selic. “It will surprise me greatly if it doesn’t.” For the chief economist of the Economic Analysis, André Galhardo, the reading that Galípolo will be a “name of the PT bench” in the Central Bank does not hold up. “During the campaign, when Lula approached Galípolo, the economist was seen as a link between the President of the Republic — at the time, a candidate — and the financial market. It was a nod from the PT to the financial market, says Galhardo. of Banco Fator, an institution with a tradition of privatization programs and public-private partnerships (PPPs), from 2017 to 2021. Learn more about the profile of Haddad’s former number 2. “I see the choice [de Galípolo] with good eyes. He is a financial market economist, but he has a vision of the importance of monetary policy on economic development and the impact of decisions on other variables. So, I think it’s a good name that represents balance”, he concludes. Galhardo believes that the new BC director will not have a direct influence on the decisions of the Monetary Policy Council (Copom) on interest rates. But he considers that the fact that he is the possible successor of Campos Neto can supposedly give more weight to his opinions among the board members. “Perhaps the first Selic cut, which should take place in August, coincides with his arrival. But this is far from Gallípolo’s influence,” he says. “That would be a rhetorical reading. The BC already has few arguments to maintain the interest rate at 13.75% per annum. So, it is a late decision, but one that must take place”. Alex Agostini, chief economist at Austin Rating, recalls the criticism of the name of Galípolo after his nomination to the monetary authority. One of the points that displeased the market, he says, was the lack of experience of the economist at the trading desk (where financial market assets are traded), since monetary policy is closely linked to this activity. “He, however, will be very well advised at the BC by career technicians, who monitor this for many years”, he says. “So, I think that criticism was momentary.” Agostini also believes that Galípolo will be the mediator of the relationship between the monetary authority and the federal government. “He ends up being, naturally, a balance point between the more austere posture [rígida] of the Central Bank and what the government wants,” he says. “It doesn’t mean, therefore, that it will always go in the same direction as the government wants.” The chief economist at Austin Rating also reinforces that, despite the possible changes in next year, there are great chances that Galípolo will assume the presidency of the BC in 2024, when the mandate of the current president of the institution ends. “It is worth remembering that he has a good relationship with Campos Neto. I think that, if this succession takes place, it will be quite peaceful and moderate”, he says. Alexandre Espirito Santo, from Órama, recalls that the profile of the BC board has fluctuated a lot with each administration. “Some are professors, with great reputation in the academia. Others are more operational, originating in the financial market”, he explains. “And others, a middle ground — which I see with good eyes.” Another point that worries part of the market, according to the economist, is that Galípolo would be aligned with Modern Monetary Theory (MMT). This is a school of economic thought that does not see restrictions on government spending if the Central Bank is the issuer of its currency — and provided that there are some conditions. , denied that his economic orientation is that way. It’s something to watch out for.”

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