Pacheco demands explanations from Campos Neto for high interest rates – 06/28/2023 – Market

The president of the Senate, Rodrigo Pacheco (PSD-MG), made a new demand for the fall in the Selic (basic interest rate) this Wednesday (28) and said that the president of the Central Bank, Roberto Campos Neto, will be called to give explanations in the plenary of the House.

When participating in a legal forum at the Lisbon Faculty of Law, Pacheco stated that the Central Bank’s autonomy law provides that, every semester, the president of the body must present the bases of its monetary policy to the Senate.

“We will faithfully comply. In addition to the commissions’ invitations, [vamos] call Roberto Campos Neto so that he can demonstrate the reasons why the interest rate is still 13.75%, considering all the economic and financial factors conducive to the reduction”, he said.

On Tuesday (27), the CAE (Economic Affairs Commission) of the Senate approved an invitation for Campos Neto to provide explanations, after one of the requests was presented by the leader of the government in Congress, Senator Randolfe Rodrigues (Rede-AP).

The Senate has been encouraged by President Luiz Inácio Lula da Silva (PT) to charge the monetary authority amid fears that the Selic level (basic interest rate) will stifle economic activity.

During the event in Lisbon, the President of the House mentioned falling inflation, the result of the trade balance and the exchange rate as positive factors, which allowed for a cut in the Selic as early as August.

“I have no doubt of President Roberto Campos Neto’s desire to reduce interest rates, but it is very important in this public mission faithful to complying with Article 11 of Complementary Law 179, that we start the second semester with this purpose of reducing the basic rate in Brazil,” he said.

The minutes of the last Central Bank meeting, released this Tuesday (27), state that the decision to maintain the basic interest rate at 13.75% per annum was unanimously approved by the Copom (Monetary Policy Committee). There was only disagreement regarding the signaling of the institution’s next steps.

For most members, there is room to start a “parsimonious process” of interest rate cuts in August if inflation continues to fall. The collegiate, however, warned that the Selic reduction requires confidence and that a premature easing could reaccelerate the country’s inflation.

Lula and several of his ministers have been publicly demanding Campos Neto reduce interest rates. The current head of BC was appointed by the government of Jair Bolsonaro (PL) and has a mandate until 2024.