In France, Haddad says that the Copom communiqué was ‘very bad’ and does not alleviate the situation

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Finance Minister Fernando Haddad said this Thursday (22) that the communiqué from the meeting of the Central Bank’s Monetary Policy Committee (Copom) is “very bad” and does not “alleviate the situation”. The statement was given in France, where he is accompanying President Luiz Inácio Lula da Silva, and was passed on by his press office. This Wednesday (21), the Copom kept the basic interest rate stable at 13.75% per annum, and did not bring any indications about a possible reduction in the interest rate in future meetings. “Communication, as usual, the fourth communication very bad. All were bad. Sometimes he relieves in the minutes [documento divulgado na semana seguinte aos encontros do Copom], but it does not alleviate the situation”, said minister Haddad. The financial market began to project, since last week, an interest rate cut from 13.75% to 13.50% per annum in August. analysts that the Copom communiqué could provide some indication of this movement. However, unlike previous communicators, this time, the committee did not signal the possibility of an increase in the Selic. In Haddad’s view, there is a “mismatch” between what is happening with Brazil, with the drop in the dollar, the interest rate curve in the futures market and with economic activity, with the view of the Central Bank. “It is a clear sign that we could signal a cut in the Selic rate, which is the highest in the world. By far from second place. We are there with real promise [desconta a inflação estimada para os próximos 12 meses] which should be hitting 8% [ao ano]. This is the reality, and then there is the impact on the stock exchange, on retail, the known impacts”, added the minister. Impact on public accounts and inflation According to Haddad, Copom’s decision to keep the interest rate stable in current level, the highest in six and a half years, will impact public accounts – through increased spending on interest rates. “States are losing revenue, municipalities are losing revenue. The Union is not performing. There are other issues being resolved”, said the minister. According to Haddad, the Copom’s decision means that the country would be “contracting problems with this interest rate, future”. Copom Communiqué In addition to not signaling interest rate cuts at the next meetings, although it removed the expression that it could raise the Selic rate again, the Copom communiqué also calls for “patience and serenity”. demands patience and serenity in conducting monetary policy and recalls that future steps of monetary policy will depend on the evolution of inflationary dynamics”, states the text released by the Central Bank. The Copom also informed that the policy of maintaining the rate at 13.75% has had the desired effects of controlling inflation. The Copom stated that the moment is one of “patience” and “serenity”. At this moment, the institution is already targeting next year’s target. six to 18 months to have full impact on the economy. Last week, financial market economists reduced the inflation estimate for this year, from 5.42% to 5.12%, and started to project an inflation of 4% for 2024. The inflation target for next year, defined by the National Monetary Council (CMN), is 3% and will be considered met if it fluctuates between 1.5% and 4.5%. Lula’s criticism of interest rates The Lula government has pressured the Central Bank to reduce interest rates. The assessment is that the current Selic level inhibits economic growth. This Monday (19), in an internet broadcast, Lula again said that the president of the Central Bank, Roberto Campos Neto, needs to explain to the population why the Selic remains at 13.75%. “Only the interest rate needs to go down, because there is no explanation either. The president of the Central Bank needs to explain, not to me, because I already know why it doesn’t go down, but to the Brazilian people and the Senate, [explicar] why doesn’t he download [a taxa]”, he said. This Wednesday (21), 51 members of the Council for Sustainable Economic and Social Development of the Presidency of the Republic, called Conselhão, joined the criticism and released an open letter to the president of the Central Bank and the directors of the institution asking cut in the basic interest rate.

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