I’m worried about what’s happening in the market, Haddad tells CNN about effects of high interest rates

In an interview with CNN this Friday (10), the Minister of Finance, Fernando Haddad, stated that he is worried about what is happening in the market, due to the interest rates practiced.

“The turn was very strong. when the rate [Selic] was at 2%, I am aware of solid companies that took [crédito] to 6%. Today, those same entrepreneurs are rolling at 20%,” he said.

The minister pointed out that in places like the European bloc and the United States, the interest rate is still at a very low level, or even negative, despite inflation. “Today Europe is very afraid of the impact of fighting inflation, which fell from 9.2% to 8.5% and which celebrates this fall. How many decades has it been since inflation in Europe has been at this level? So why doesn’t the central bank shock interest rates? Because after practicing negative or very low rates for so long, they are worried about what the real world impact is going to be. Nobody is against fighting inflation, we have to fight it”.

Haddad reinforced that these are countries with very low inflation targets and that, even so, they are afraid of the effect that an increase in interest rates can have.

“My concern as Finance Minister is to calibrate in a confusing and difficult world, with many things that happened that were not in the script. There is war, a geopolitical problem, there are all sorts of things. What I am pondering is that we have to know how to navigate turbulent seas”.

The minister assesses that there must be a relationship of trust between the fiscal and monetary authorities. “We are in the same direction so that one policy strengthens the other. Monetary affects the fiscal and fiscal affects monetary. This division between monetary and fiscal policy is a way of thinking about the economy that may not be able to translate the complexity of this organism.”

Tax framework

Finance Minister Fernando Haddad said that he already has the basis ready, within the economic team, for the new fiscal rule that should replace the old spending ceiling, and that the proposal has been “very well received” by economists and specialists from outside the government with whom the minister and his team have been carrying out the first surveys.

Without giving further details, Haddad also stated that the new fiscal framework “is not a debt rule”. “I don’t think this would work under local conditions,” he said.

Haddad talks, tonight, with the anchors of CNN William Waack, Daniela Lima and Raquel Landim, in an exclusive interview.