Lula’s fight with the Central Bank puts pressure on Haddad – 07/02/2023 – Bruno Boghossian

The last chapters of Lula’s fight with the Central Bank put an extra dose of pressure on Fernando Haddad and fuel internal disputes in the government. The finance minister worked to suit the president’s political platform while offering investors some guarantee of stability. Now, it becomes the focus of tension on both sides of the dispute.

Haddad recognizes the position he occupies. This Tuesday (7), he pointed out that the BC had highlighted the efforts of the Ministry of Finance to reduce the hole in this year’s accounts. With the statement, the minister tried to reduce the fervor, but ended up admitting indirectly that the drop in interest charged by Lula depends on the results of this endeavor.

In practice, the bank’s Monetary Policy Committee rolled the ball to Haddad. The Copom says that the minister’s package to increase tax collection and cut expenses can reduce the risk of high inflation, but warns that it is necessary to monitor “the challenges in its implementation”.

In other words, the BC team that sets the interest rate suggests there may be room for cuts if the government does its homework.

Despite accepting the bargain in a technical arena, the head of the Treasury was also scheduled for a political role. Still this Tuesday, Lula said that ministers and the Senate should monitor the performance of the Central Bank. For the mission, the president named Haddad and Simone Tebet, who have been acting in tandem.

Other petistas use a diplomatic tone to suggest that Haddad should be responsible for a behind-the-scenes articulation for cutting interest rates. Senator Jaques Wagner, leader of the government, told the Sheet that the minister “will talk all the time with the president of the Central Bank”.

The scenario also throws Haddad into a clash with a PT wing that, instead of a tightening, advocates an injection of public money to circumvent the risk of low growth in 2023. The minister knows that the group is trying to take advantage of the moment to exert influence over Squid.

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