BRASILIA (Reuters) – President Luiz Inácio Lula da Silva said on Tuesday that he does not want confusion with the Central Bank, but noted that the head of the monetary authority, Roberto Campos Neto, owes an explanation to the National Congress about his conduct, in a breakfast with journalists from vehicles sympathetic to the government.
“I don’t want confusion with the Central Bank. (…) I do not argue with the BC president. He owes an explanation to the National Congress. What I want is for Brazil to grow again and to distribute income”, he said, according to a publication on the website 247.
According to the complementary law approved during the Bolsonaro government, which instituted the autonomy of the Central Bank, the president of the institution “must present, in the Federal Senate, in public hearing, in the first and second semesters of each year, an inflation report and a financial stability report, explaining the decisions taken in the previous semester”.
Lula and members of his administration have repeatedly criticized the high interest rate, currently at 13.75%, and the independence of the Central Bank, with the petista claiming that the institution does not do more now than when its president was changed whenever a new government took over. The financial market has reacted badly to these clashes, fearing attempts by the Executive to intervene in the monetary authority.
At breakfast, the president repeated his calls for the BC to seek to act in line with the macroeconomic strategy of the current management in the medium and long term. He said that it is necessary to have fiscal responsibility, as he had in the first two terms, but also political, economic and, above all, social responsibility, highlighting that the last one is the most important.
“When I was president the other time, I had José Alencar to criticize the interest rate policy, now I do it myself,” said Lula, at another time over breakfast, according to a publication on his own Twitter.
“It shouldn’t be normal for a President of the Republic to argue with the president of the Central Bank, verbally, because personally I only had one contact with him. I think that people who believed that the independence of the Central Bank was going to change something in Brazil, that it was going to be better, have to look at whether it was worth it or not”, he reinforced.
In an event in Miami in the morning, at the same time that he was the target of new attacks by Lula, the BC president highlighted that the independence of the institution is important because it disconnects the cycle of monetary policy from the political cycle.
Speaking at the 2023 Milken South Florida Dialogues event in Miami, Campos Neto used most of his speech to talk about digital innovation topics, but briefly said in response to a question that BC independence is “very important”, for several different reasons.
“The main reason in the case of Central Bank autonomy is that it disconnects the monetary policy cycle from the political cycle, because they have different durations and different interests. The more independent you are, the more effective you are, the less the country will pay in terms of the cost of monetary policy inefficiency”, said Campos Neto before returning to talk about the autarchy’s innovation agenda.
(Reporting by Ricardo Brito)
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