Minutes of Copom came with terms ‘more consistent’ with perspective of improvement, says Haddad – 03/28/2023 – Market

Minister Fernando Haddad (Finance) said this Tuesday (28) that the minutes of the Copom (Monetary Policy Committee) of the Central Bank “came with more consistent terms” than the statement released shortly after the meeting last Wednesday. (22).

In the document, the BC collegiate nodded to the Ministry of Finance amid pressure from the Luiz Inácio Lula da Silva (PT) government to reduce interest rates and dedicated a long paragraph to the new fiscal rule being drawn up to replace the spending cap.

“I believe that [a ata] is in line with the communiqué, but just as it happened in the previous Copom, the minutes with more time to prepare came with terms that I would say are more consistent with the future perspectives of harmonizing the fiscal policy with the monetary policy. Which has always been our wish,” said the minister.

Shortly after the meeting last week, the head of the Treasury had classified the tone of the Copom communiqué as “very worrying”. Last Wednesday, the Central Bank did not give in to pressure to reduce interest rates, it opposed Lula and maintained the basic rate (Selic) at 13.75% per annum.

In the minutes released this Tuesday, the Central Bank echoed Haddad’s speech on harmony between monetary and fiscal policies and their positive effects.

“The committee reinforced that the harmony between monetary and fiscal policies reduces distortions, reduces uncertainty, facilitates the disinflation process and encourages full employment over time”, said the monetary authority in the document.

The Copom also highlighted that a “solid and credible” fiscal rule can help in the disinflation process by producing effects on expectations, although the presentation of the new framework has no direct and immediate relationship with the interest rate policy.

The BC collegiate highlighted in two parts of the communiqué the need for “serenity and patience” throughout the disinflation process in reference to the lagged effects of monetary policy on the economy.

Questioned by journalists if the government would help the work of the monetary authority in this sense, Haddad countered by saying that the BC also has to collaborate with the PT administration.

“The Central Bank also has to help us, it is an organism that has two arms, one helping the other. I always insist on this thesis because it gives the impression that one is a spectator of the other, that is not how economic policy has to work. They are. two active sides, competing for the same purpose, for the same objective, which is to guarantee growth with low inflation”, he said.

“This is only possible by harmonizing the fiscal policy with the monetary policy, we are going to achieve our objectives, to make the country grow again in a sustainable way after ten years, that is the president’s wish”, he added.