Lula says inflation target doesn’t have to be ‘eternal’ – 06/29/2023 – Market

President Luiz Inácio Lula da Silva (PT) defended this Thursday (29) that the inflation target should not be “fixed and eternal” but should be mobile to take into account the economic situation at that time.

“I don’t know what the Monetary Council’s decision is, they will make the decision. What I think, what I think now as a Brazilian citizen is that Brazil does not need to have such a rigid inflation target, as they are wanting now, without achieve,” said the president.

“We have to have a goal that we reach. If we reach that goal, we can reduce it and take one more step, go down one more step. […] That’s why monetary policy has to be mobile, it doesn’t have to be fixed and eternal. You have to be sensitive to the reality of the economy, the aspirations of society”, completed the representative.

The statement was given during an interview by the president to Rádio Gaúcha, the main broadcaster in Rio Grande do Sul.

The president’s speech takes place on the eve of the CMN (National Monetary Council) meeting, which will discuss the 2026 target and the possibility of adopting a continuous objective, a model in which the Central Bank needs to pursue a certain level of inflation without being linked to a closed calendar year —as is the case today.

Lula also criticized the country’s basic interest rate and also the president of the Central Bank, Roberto Campos Neto. He said that the director of the institution “doesn’t understand anything about the country”.

The speeches took place after the Central Bank maintained the basic interest rate at 13.75%, which generated a reaction from several members of the government. The Senate approved a request to summon Campos Neto to give explanations.

“Today there is no economic, sociological, philosophical explanation, whatever you want to think of why the interest rate is 13.75% because we don’t have demand inflation. I think it’s a mistake,” Lula said during the interview;

“Now you have a citizen who, it seems to me, understands absolutely nothing about the country, about the people, has no feeling for the feelings of the people and maintains an interest rate to meet whose interests?”, he completed.