Unions protest against BC and ask for interest rate cut – 02/14/2023 – Market

Unions protest this Tuesday (14th) against the actions of the BC (Central Bank) and demand a cut in the basic interest rate, the Selic. There are records of demonstrations in front of BC buildings in capitals such as Rio de Janeiro and São Paulo.

The acts were convened by bank unions in the midst of a series of criticisms by President Luiz Inácio Lula da Silva (PT) of the level of interest rates in the country.

In the view of the entities, the drop in the Selic rate is necessary to stimulate economic activity and job creation. Protesters also call for the departure of BC president Roberto Campos Neto.

Part of the images publicizing Tuesday’s acts, shared on social networks, carries the words “Fora Campos Neto”.

The Selic is at 13.75% per annum. With the fear that high interest rates will jeopardize economic growth, Lula has been criticizing the Central Bank and defending the change in the country’s inflation target.

The official justification is that this would open space to anticipate the beginning of the basic rate cut, encouraging economic activity. Last week, Lula called the Selic level a “shame”.

The president’s speech, however, has been putting pressure on inflation expectations and the interest rate curve, which has the opposite effect to the intended one.

This Tuesday, Campos Neto said that it is necessary to have “a little more goodwill with the government” and praised its economic policy. The statement took place one day after his participation in the program Roda Viva, on TV Cultura.

During the interview, Campos Neto defended the action of the Central Bank and criticized a possible change in the inflation target, but stated that he will do everything in his power to bring the monetary authority closer to the government.

In recent days, the economist has been in the sights of PT members who exploit his proximity to Bolsonarist politicians in an attempt to increase his weariness.

Former Esplanada colleagues and former BC leaders heard by the Sheethowever, minimize the moments in which Campos Neto showed greater proximity to the Jair Bolsonaro (PL) government and say that his performance has been strictly technical at the head of the institution.

The increase in the Selic rate is the Central Bank’s instrument to try to cool the demand for goods and services and, thus, contain prices, in addition to anchoring inflation expectations.

The expected side effect is the loss of momentum in economic activity, because the cost of credit is higher for companies and consumers.