Campos Neto defends coordinated monetary and fiscal policies to avoid a “collision course”

The president of the Central Bank, Roberto Campos Neto, defended this Saturday (26) during the Esfera Brasil Forum, coordination between monetary and fiscal policies to prevent Brazil from entering a “collision course”, once again warning that the conduct of the public accounts has an effect on BC decisions.

“You don’t want to be, on the one hand, raising interest rates, and, on the other, the fiscal being expansive, because in the end you enter a collision course”, he said.

“We need to understand that we had a very high global expense, that there is a very high debt to be paid in all countries, in Brazil as well. This has an effect on what the Central Bank does. “Campos Neto shared the stage with vice president-elect Geraldo Alckmin, who reinforced the commitment of the government of Luiz Inácio Lula da Silva to fiscal responsibility. Campos Neto also spoke about the increase in interest rates.

Future interest rates have risen in recent weeks amid the perception of high fiscal risk in the face of the elected government’s attempt to facilitate broad extra-ceiling spending.

“What we need to understand is that interest is not a cause, it is a consequence, it is a consequence of a job well done. Obviously, no central banker wants high interest rates, we want low interest rates”, continued Campos Neto.

Challenge inflation and sustainable growth

At the event, the BC president also warned of the risks of inflation, in the midst of growing expectations in the financial market that price pressures may regain momentum from next year under the fiscal easing intended by the elected government.

“Inflation is a social element as well. Those with more resources protect themselves from inflation, those with less do not. It makes the long-term planning of companies and people very difficult, which in the end means less growth and less employment,” said Campos Neto.

The president of the Central Bank also stated that sustainable growth sums up the great challenge for the economy. “We need to bring this to our agenda. We need to democratize the financial system, generate inclusion and financial education. And we made several reforms in the capital market”, he reaffirmed.

“We need to use technology to reduce entry barriers in the financial system. We need to move forward in climate sustainability,” she added.

England treated as emerging

The BC president also said that the market is neither right nor left. “The market is a price gear. And the market price is important because it says how, where and when to allocate resources”, he said at the Esfera Brasil Forum.

Campos Neto said that, for the first time, the market treated England in the same way as it treats emerging countries, such as Brazil. “The event in England broke several paradigms about the market. We saw the disorganization of prices that occurred at the speed it did, due to a very similar fiscal issue. It was the first time that a developed market with a lot of liquidity lost liquidity in the same way that emerging markets lose”, he said.

(With information from Luana Maria Benedito, from Reuters, and from Estadão Escolha)