Central Bank Director says criticism is healthy, but denies there is “embarrassment” or pressure on the conduct of monetary policy
The Director of Monetary Policy at the Central Bank, Gabriel Galípolo, backed down this Thursday (August 22, 2024) and said that he expressed himself poorly in his speech during the 32nd Congress of Fenabrave (National Federation of Motor Vehicle Distribution). The economist had said that the BC directors do not have the “embarrassment” to eventually raise the Selic rate, if necessary.
Despite the setback, he reinforced that he considers “completely healthy“the receipt of public criticism about the conduct of monetary policy and that this”no way” generates any embarrassment or pressure on the work of directors. The BC has been the target of criticism from government officials and the market after ending the sequence of 7 consecutive cuts in the Selic rate in June.
The current base interest rate is 10.50% per year, a level decided in June and maintained by Copom in July. The next meeting of the monetary authority is scheduled for September 17.
“I have just come from a speech in which I expressed myself poorly and was misinterpreted, even though I repeated it several times: I am reaffirming my previous speech. I have to be available to receive this criticism.”, he said in relation to the event from FGV (Getulio Vargas Foundation).
WHAT GALIPOLO SAID
Earlier, Galípolo said that the financial market had a perception that the Central Bank was unable to use “tools” to control inflation, such as increasing the base interest rate. This perception had an impact on assets, especially after the appointment of four directors made by the Lula government.
The economist denied, however, that there is any such embarrassment among the members.It’s not something that any of us at Copom [Comitê de Política Monetária] felt at no point, this embarrassment that we couldn’t do this”, he declared.
Galípolo stated that he was having difficulty communicating with financial agents about monetary policy. One of these messages was to dispel doubts about a possible Copom decision that would displease the government.
“There was an interpretation or feeling on the part of the market that this was a Central Bank that did not have all the necessary tools to exercise monetary policy. In other words, that, in some way, there was some kind of constraint that prevented the possibility, for example, of interest rate hikes.”, he declared.
“The Central Bank’s difficult position is not having to raise interest rates, it is inflation outside the target”, he declared at the event.
Later at FGV, he said that President Luiz Inácio Lula da Silva (PT) always assured that he and the other 3 nominees have “freedom” and “full autonomy” to make decisions – even those that may displease the government.
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