09/10/2024 – 6:30
The appointment of the director of Monetary Policy at the Central Bank (BC) Gabriel Galípolo as president of the institution from 2025 onwards was approved this Tuesday, 8th, by the Senate by a large majority, by a score of 66 to 5. Financial market analysts evaluate However, the challenges for the economist will not be small, and may begin with their relationship with the government and the pressure for lower interest rates.
+’The function of the BC is to be conservative’: see sentences from Galípolo during a hearing in the Senate
+ During the hearing, Galípolo talks about freedom in BC management and commitment to the people
“The expectation is that Galípolo should not have a truce from the PT, at least in the first months of its mandate”, says the partner and specialist in Variable Income at Davos Investimentos, Marcelo Boragini, in relation to the criticisms made by the party regarding the level of interest rates . “The pressure is expected to last until at least mid-2025.”
Analysts also point to anchoring inflation as another major challenge. “The projections for 2024 and 2025 are already far from the 3% target, and the Central Bank will need to act preventively to avoid the consolidation of this trend”, says the international coordinator of the Fractal Group, Gabriela Paixão.
Until the end of the year, Galípolo will remain as director of Monetary Policy at the municipality and will participate in two more meetings of the Monetary Policy Committee (Copom) to define interest rates. And the market projects new increases in the Selic, with the basic interest rate ending 2024 at 11.75% per year.
Market sees signs of independence in Galípolo
Financial institution analysts hope that Gabriel Galípolo will continue the management model of the current head of the municipality, Roberto Campos Neto, and will in fact continue to pursue compliance with inflation targets.
“The market has clung, in recent weeks, to the positive signs that came mainly from the last Copom meeting”, says the head of Content at Faz Capital, Tayllis Zatti. “It was the first upward movement since August 2022 and in a unanimous decision, despite criticism from Lula.” Zatti sees the move as a nod to Gallipolo’s independence.
In a statement, the president of Febraban, Isaac Sidney, stated that the sector sees “the future mandate at the head of the monetary authority as very promising” and highlighted the “serene and institutional” way in which the transition has been conducted.
Founding partner of Fundamenta Investimentos, Valter Bianchi Filho highlights Galípolo’s good performance in the hearing. “Rhetoric aside, it is his attitudes that the market will pay close attention to, and he will be very successful in his mandate if he gains the trust of agents and does not allow himself to be contaminated by political pressure.”
“Galípolo has the capacity to be there, his indication is positive for the market, the only concern is that he is very close to President Lula”, says the chief strategist of the Laatus group, Jefferson Laatus.
In another field, there are economists critical of Campos Neto who hope for a turnaround with the new management. “Inflation can be controlled in different ways, including interest rates, but this control cannot in any way suffocate the economy”, says Pedro Afonso Gomes, president of the São Paulo Regional Economic Council (Corecon-SP) . “Galípolo has these conditions, this social sensitivity that will change the way the Central Bank acts.”
“We will only know for sure in January, at the first meeting that will actually be held with him presiding”, concludes Laatus. The first meeting of the Committee under the leadership of Galípolo at BC will be on January 28th and 29th, 2025.
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