Lula’s personal criticism shows lack of knowledge about BC autonomy, says Campos Neto – 05/22/2023 – Folha Seminars

The president of the Central Bank, Roberto Campos Neto, stated that President Lula’s (PT) personal criticism of his performance in command of the institution “demonstrates a lack of knowledge” in relation to the rules on the autonomy of the monetary authority.

According to him, the president of the BC has autonomy from the Executive in the same way that the directors of the institution have autonomy in relation to the commander of the monetary authority.

As he is only one of the nine votes on the Copom, the committee that sets the basic interest rate, it is not the BC president who imposes his will.

“After raising interest rates in the election year, the way we raised them, to ensure that the new mandate, regardless of who won, was a mandate in which inflation would be more restrained, I confess that I imagined that this would be recognized. “

“Some statements go in the direction of not understanding the rules of the game.”

This statement was made this Monday (22nd), during a seminar on the two years of Central Bank autonomy promoted by the Sheet, sponsored by Febraban (Brazilian Federation of Banks).

The event can be seen in full at this link and on the channel of Sheet on Youtube.

Campos Neto and President Lula have clashed over the basic interest rate in the country (Selic), set at 13.75% per year by the Copom (Monetary Policy Committee).

The PT reading is that the high interest rate harms economic activity, whose resumption is seen as crucial for consolidating popular and political support for the government.

This week, the president forwarded to the Senate the nomination of the executive secretary of the Ministry of Finance, Gabriel Galípolo, a name he trusts, for the post of director of monetary policy at the Central Bank. If approved, he will occupy the board responsible for deciding the level of the basic rate.

Campos Neto said that Galípolo has the technical capacity to take over the Monetary Policy Board of the institution and that he has been talking to the government representative.

According to the president of the BC, any indication that comes from outside the institution’s staff will encounter a very technical debate within the Copom (Monetary Policy Committee) and, if you want to deviate from these technical discussions, you will have to make an effort to convince .

It will be up to the markets and society, according to Campos Neto, to judge this debate.

Inflation and interest

The president of the Central Bank stated that inflation in the world and in Brazil is more linked to demand pressures than supply shocks.

In relation to Brazil, discounting food and energy items, the decline is slow and the level is still high and well above the world average.

“We see a big deceleration of inflation [no Brasil]but the core is at 7.3%, which is quite a high level and well above the target.”

He also highlighted the drop in the projection of inflation in the Focus survey and stated that this may be related to the reduction in fuel prices.