Lula sees betrayal of BC president – 02/04/2023 – Mônica Bergamo

President Lula and ministers in his government consider that the president of the Central Bank, Roberto Campos, betrayed the confidence that the government placed in him to dialogue and participate in a joint effort for Brazil to overcome the economic problems it faces today without going through a recession.

In the understanding of the president and his team, the current government, with just over a month in power, is not responsible for the fiscal deficit and inflation, which drive up interest rates. And he would deserve a vote of confidence in his commitment to bring the gap to 1% this year, and to close it in 2024.

Even in the face of clear targets, say Lula’s direct interlocutors, the Central Bank not only maintained the basic interest rate (Selic) at 13.75% per year for the fourth consecutive meeting —the first since Lula took office—, but also tightened the speech and said he should leave rates at high levels for longer.

With this message, the BC would be hindering the recovery of credit and economic activity in the country, and putting Brazil on the path of recession.

Lula and the government believe that the warnings made by the Copom went far beyond what was necessary. And they began to distrust the performance of Roberto Campos, appointed to the position by Jair Bolsonaro for a four-year term.

Senior ministers began to avoid him. And the Minister of Finance, Fernando Haddad, who praised him, has already shown opposition to his performance.

Lula has stated, according to the same interlocutors, that Campos was treated with respect and consideration, and that there was no reciprocity on his part.

The president of the Central Bank has always been aligned with Bolsonarism.

Despite the institution’s autonomy, approved in the last government, Campos even went to Bolsonaro’s dinners with businessmen organized to support the economic measures adopted by the president and the then Minister of Economy, Paulo Guedes.

Campos even spoke at meetings, and admitted in one of them that he received advice not to go to events with politicians who were part of the government.

But it justified: since Bolsonaro’s ministers were ‘technicians’, there would be no problem mixing with them. Proximity would not tarnish their autonomy and independence.

The president of the Central Bank remains close to Bolsonaristas. He went to the inauguration of Tarcísio de Freitas in the government of São Paulo and, until the middle of the month, he was in a WhatsApp group that brings together former ministers of Bolsonaro.

In an interview with Rede TV! this week, Lula made it clear that he is upset with Roberto Campos, whom he referred to as “this citizen”.

“I want to know what the Central Bank’s independence was for. I’ll wait for this citizen [Campos Neto] end his mandate so that we can make an assessment of what the independent central bank meant,” said Lula.

The BC released the statement in which it raised the tone and contradicted the Lula government on Wednesday (1st), after maintaining the Selic rate at 13.75%.

The text made warnings about fiscal uncertainties and the worsening of inflation expectations, which are moving away from the target in longer terms.

It also signaled that the BC should leave interest rates at the current level for a longer time — today the market predicts the beginning of monetary easing in September.

“The Committee reinforces that it will persevere until it consolidates not only the disinflation process but also the anchoring of expectations around its targets, which have shown deterioration in longer terms since the last meeting”, stated the statement.

_{with BIANKA VIEIRA, KARINA MATIAS It is MANOELLA SMITH}

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