Central Bank’s Director of Monetary Policy is appointed by Lula to lead the monetary authority from 2025
The Director of Monetary Policy at the Central Bank, Gabriel Galípolo, said this Wednesday (Aug 28, 2024) that it is a “huge honor and great responsibility” be appointed by the president Luiz Inacio Lula da Silva (PT) to command the monetary authority from 2025. The announcement was made by the Minister of Finance, Fernando Haddad.
“The nomination is still subject to approval by the Senate, so I will be brief. On the same scale, it is an honor, a pleasure and an immense responsibility to be nominated for the presidency of the Central Bank of Brazil by Minister Fernando Haddad and President Luiz Inácio Lula da Silva. It is a huge honor and a great responsibility. I am very pleased.”he told reporters shortly after the statement.
Galípolo said he would not answer questions at this time out of respect for the Senate’s approval process.
WHO IS GALIPOLO
Gabriel Muricca Galípolo is an ally of Haddad. Even as director of Monetary Policy at the Central Bank, he attended meetings at the Ministry of Finance outside of official commitments. The economist says he has “great empathy with Fernando [Haddad] about various things he thinks”. The relationship between the two predates the 2022 electoral dispute. In April of that year, they wrote an article in the newspaper S.Paulo Newspaper in defense of “South American currency”.
In May 2024, a meeting with polarized votes at Copom (Monetary Policy Committee) increased the concern of economic agents regarding the influence of the Lula government on monetary policy decisions.
Galípolo and three other government appointees voted for a larger cut in the Selic, the benchmark interest rate, while four other directors and President Campos Neto, who held seats in the Bolsonaro government, opted for a smaller reduction in the level. The split was seen as a signal that Lula’s Central Bank would be more lenient with high inflation.
Agents’ concerns eased after Galípolo and the other three directors accompanied their senior colleagues to the next meeting. In recent days, the Monetary Policy Director has said that the Central Bank may raise interest rates, which is seen as a sign of greater credibility from the monetary authority.
More recently, the PT (Workers’ Party), Lula’s party, criticized Galípolo when he said that the increase in the Selic rate is not 100% ruled out.
The base interest rate is 10.5% per year. On July 31, 2024, the Central Bank maintained the base interest rate at the same level for the 2nd consecutive meeting. The monetary authority is working with the possibility of raising interest rates in 2024 to control financial market agents’ expectations for inflation.
On Monday (August 26), the Focus Bulletin showed that analysts increased their estimate for the IPCA (Broad National Consumer Price Index), which measures the country’s official inflation, to 4.25%. It is getting closer and closer to the ceiling allowed by the target, which is 3% and has a tolerance of up to 4.5%.
HISTORY
In April 2022, Galípolo participated in a dinner with businessmen alongside the deputy and president of the PT, Gleisi Hoffmann. There was a reason for her presence: to ease the tension between the congresswoman and the business community.
The then coordinator of the technical group and current president of BNDES (National Bank for Economic and Social Development), Aloizio Mercadantewas the one who called Galípolo and invited him to join the transition infrastructure team.
“I started by participating in the infrastructure team. And, even before receiving the invitation, President Lula invited me to a meeting with the economic transition team […] together with Fernando [Haddad]. And then came the invitation from Fernando, together with the president, for me to be the executive secretary.”Galípolo declared on June 13, during an event held by the magazine Piauí.
Read below highlights about Galípolo’s career:
- has a degree and a master’s degree from PUC-SP (Pontifical Catholic University of São Paulo);
- graduated in economic sciences, from 2000 to 2004, and specialized from 2005 to 2008;
- While completing his master’s degree, he taught classes on contemporary Brazilian economics; macroeconomics; economics for international relations; introduction to political science; history of economic thought; and political economy. He was a professor from 2006 to 2012 – he started when he was 24 years old;
- he also taught at FESPSP (São Paulo School of Sociology and Politics Foundation);
- in 2007, he was head of economic advisory at the State Secretariat for Metropolitan Transport, headed at the time by José Luiz Portella Pereira, in the government of Jose Serra (PSDB);
- in 2008 he went to the Project Structuring directorate at the State Secretariat of Economy and Planning, headed by Mauro Ricardo Costa;
- from 2009 to 2022, he worked in his own consultancy and structured economic and financial feasibility studies for concession and PPP (public-private partnership) projects, which culminated in his nomination for the transitional government in 2022;
- Galípolo helped the current president of BNDES (National Bank for Economic and Social Development), Aloizio Mercadanteto develop the government’s economic plan in 2010 during his candidacy for governor of São Paulo;
- in 2017, the economist became CEO of Factor Bankwhich began operating in 1967 in Rio. The financial institution is known for its work in the PPP and privatization market. He headed the financial institution for 4 years, until 2021. He created ties with the financial market during this period;
- in 2022, he became a senior researcher at the Brazilian Center for Institutional Relations, where he worked for 1 year and 7 months. He was an advisor to Fiesp (Federation of Industries of the State of São Paulo) in 2022;
- at the age of 40, he took over as executive secretary of the Ministry of Finance – number 2 in the department, below Haddad;
- was appointed to the board of the Central Bank in May 2023, when he was 41 years old.
EXECUTIVE SECRETARIAT
Galípolo argues that communication and transparency are the correct ways to create public policies – a topic that has advanced at the Central Bank under the leadership of Campos Neto.
He believes that polarization is bad for business, but he still has strong socioeconomic connections with Haddad. He worked to ease the rejection of the PT government by businesspeople.
As executive secretary, he said he trained in the proper way to convey messages internally: “Some words became trigger words. When you used a certain terminology or word, you were immediately identified as an opposing group. Like the spending cap on one side, or subsidies on the other. It could quickly turn a civilized and peaceful meeting into a Twitter spat.”.
The former number 2 at the Treasury played an important role in articulating the situation in Congress. He and the economic team developed a fiscal framework that would allow for the expansion of spending above inflation, but would not cause the trajectory of public debt to get out of control.
PERSONAL RELATIONSHIPS
Gabriel Galípolo wrote books with Luiz Gonzaga Belluzzo, an economist with developmental thinking who has defended the creation of a fund to contain the volatility of oil prices and prevent interest rate hikes.
Alongside Belluzo, who was president of Sociedade Esportiva Palmeiras from 2009 to 2010, Palmeiras fan Galípolo signed a manifesto in 2018 to reduce ticket prices at Allianz Parque, in São Paulo. In addition to them, Aldo Rebeloformer Minister of Sports (2011-2015) participated in the petition.
AUTONOMY OF THE BC
THE BC autonomy law establishes a “fundamental objective”, which is to ensure price stability. In practice, it serves to control inflation.
The monetary authority also aims to ensure the stability and efficiency of the financial system, smooth out fluctuations in the level of economic activity and promote full employment. All items are tasks of the Central Bank, as long as there is no “prejudice to its fundamental purpose” of inflation control.
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