Haddad and Campos Neto talk about alignment at lunch – 02/17/2023 – Market

The Minister of Finance, Fernando Haddad (PT), said this Friday (17) that the alignment of fiscal and monetary policies was the subject of the lunch with the President of the Central Bank, Roberto Campos Neto, and the Minister of Planning and Budget , Simone Tebet, before the CMN (National Monetary Council) meeting.

“[Foi um] good lunch, a first good approximation with the presence of Simone [Tebet]we had a long two-hour chat,” he said.

“We talked about aligning fiscal and monetary policies,” added the minister when asked by journalists whether the revision of inflation targets was under debate.

The first meeting of the CMN under the Lula government, on Thursday (16), lasted 28 minutes and served to approve the 2022 BC balance sheet. Before the official commitment, which was also attended by directors of the monetary authority and technicians from the economic ministries, Haddad, Tebet and Campos Neto had a lunch reserved for about two hours.

There was an expectation that the collegiate could anticipate the debate on inflation targets, due to the criticisms of President Luiz Inácio Lula da Silva (PT) in recent weeks to the current level of interest rates – the Selic is at 13.75% per year.

In the CMN’s usual schedule, the topic is discussed in the June meetings. But the subject can be put up for discussion earlier, as long as it is guided by one of the members of the collegiate. On Tuesday (14), however, Haddad ruled out that it was on the agenda for this meeting.

The current inflation targets are 3.25% in 2023 and 3% in 2024 and 2025, with tolerance margins of plus or minus 1.5 percentage points. The levels are considered exaggerated by Lula, who defends a target of 4.5%, the same level set in his first two terms.

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UNDERSTAND HOW THE NATIONAL MONETARY COUNCIL WORKS

What is CMN?

The CMN (National Monetary Council) is a body whose purpose is to formulate currency and credit policy, with the objective of preserving the stability of the currency and the economic and social development of the country.

Who votes on decisions?

The Minister of Finance (Fernando Haddad), who is also the president of the CMN; the Minister of Planning (Simone Tebet); and the president of the Central Bank (Roberto Campos Neto). Each has the right to one vote and decisions are taken by simple majority.

Who else attends the meetings?

In addition to the three advisers, the members of Comoc (Technical Commission for Currency and Credit); BC directors; and representatives of advisory committees when summoned by the president of the CMN (there are seven committees, such as rural credit, housing credit, and monetary and exchange rate policy). Advisors accredited by the advisors may also attend meetings; guests of the chairman of the board; and employees of the executive secretariat accredited by the president of the BC.

Is there a set frequency for meetings?

According to the current decree, the CMN must ordinarily meet once a month and extraordinarily when convened by its president.

Who decides the guidelines at the CMN?

According to the CMN regulations, published in the form of a 1994 decree, the president of the body defines the agenda of matters to be discussed at each meeting. He can also approve the inclusion of extra-tariff matters when they are of an urgent nature, of relevant interest or of a confidential nature.

Can other members contest the agenda?

They may request views of a subject on the agenda or presented outside the agenda, abstain from voting on any subject and request the postponement of votes.

When is the inflation target usually set?

Decree establishes that inflation targets must be set by June 30, three years in advance. That is, by June 2023, the 2026 target would be defined. To change the objectives prior to 2026, the Presidency of the Republic would need to publish another decree to create this possibility.

Has the lower-term goal change been done before?

Yes, on at least two occasions. In 2002 and 2003.