Lula returns to demand interest rate cuts in Brazil – 06/19/2023 – Market

President Luiz Inácio Lula da Silva (PT) launched this Monday (19) a new series of criticisms of high interest rates, on the eve of the Copom (Monetary Policy Committee) meeting that will decide on the new Selic level.

The members of the Central Bank collegiate meet this Tuesday and Wednesday, the 20th and 21st respectively, to decide whether to keep the Selic rate at the current level of 13.75%.

The president’s statement took place during his second live broadcast on social networks, in the morning. Lula was dealing with the current economic situation, when he took the opportunity to criticize the interest rate and the BC president, Roberto Campos Neto.

“Food is going down [o preço], the meat went down, the rice went down, the oil, you know, things are going down, and we need to go down a lot more. You know, things are downloading and more needs to be downloaded. Inflation is coming down, the dollar is falling,” the president said.

“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 explain to the Brazilian people and the Senate that elected him why he maintains that rate interest rates for a country with annual inflation of 5%”, he added.

Criticism of the interest rate level became a constant in Lula’s speech and that of his ministers. The most recent one was made precisely in the week in which the BC collegiate meets again to decide on the Selic calibration.

Despite the pressure, analysts project that the easing of monetary policy will only begin in August.

According to a Focus survey released this Monday, analysts consulted by the monetary authority improved the prospects for inflation and economic growth and began to see the first cut in the basic interest rate in August, with the Selic lower both at the end of 2023 as in 2024.

Experts continue to project that the Copom will keep the Selic at the current level of 13.75% when announcing its monetary policy decision this Wednesday (21). However, they now consider that the first reduction will take place in August, of 0.25 percentage points, against the previous forecast of maintaining the interest level.

Asked by journalists about the estimate of financial market analysts indicated in the Focus bulletin, Minister Fernando Haddad (Finance) countered by saying that, in his opinion, the interest rate cut “should have been in March”.