Categories: Business

It is up to the Senate to be “vigilant” over Campos Neto and interest rates, says Lula

It is up to the Senate to be “vigilant” over Campos Neto and interest rates, says Lula

President Luiz Inácio Lula da Silva said this Monday that it is up to the Senate to be “vigilant” with the actions of the president of the Central Bank, Roberto Campos Neto, and that the House should charge him on the interest rate, renewing the criticisms responsible for the monetary authority that have been poorly received by the financial market.

“I think the Senate has to be vigilant. Because I remember how much criticism I received from Fiesp every time I raised interest rates, I remember how many criticisms we received from the union movement when I raised interest rates, I remember how many senators made speeches against me for raising interest rates. Now they no longer have to charge the President of the Republic, they have to charge him (president of the BC). And they can. That’s what I hope,” said Lula at breakfast with journalists from left-wing vehicles at the Planalto Palace.

“I’m very calm, I don’t want any trouble. The only thing I want is for this country to return to normality, this country to grow again, to generate jobs again, to distribute income again. This is what I want. If that happens, I’m happy,” he added.

Lula’s speeches were made after he was asked directly by a journalist if the government could seek the dismissal of Campos Neto, citing the law that provides for the BC’s autonomy, in which there is a provision for the National Monetary Council (CMN) to can make this request. The exoneration would then have to be approved by the Senate with 41 votes out of 81 senators.

Complementary law 179 of 2021, which established the autonomy of the president and directors of the BC, provides among the hypotheses for dismissal of these authorities “when they present proven and recurrent insufficient performance to achieve the objectives” of the institution.

When contacted, the Central Bank did not immediately respond to a request for comment on the president’s statement.

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 actions of the monetary authority.

At the meeting with journalists, Lula said that he does not discuss with the BC president, with whom he met only once, and said that Campos Neto does not owe explanations to him, but to Congress.

For Lula, it is not possible to return to growth in the country with the Selic at the current level. “I just think that this citizen… has the possibility to mature, to think and to know how he is going to take care of this country. Because he has a lot of responsibility, ”she said.

CMN meeting

Lula also said that he hopes that the members of the CMN are following the situation in Brazil.

“I hope that Haddad is following, that Simone is following. I hope that he (Campos Neto) is following the situation in Brazil. The IMF forecast is that we are going to have very poor growth this year. And this country cannot continue to have meager growth, because this country needs to generate jobs. This country has to end a hunger of 33 million people. This country needs to create formal jobs,” added Lula.

The IMF estimates that Brazil will grow 1.2% in 2023. The scenario is better than that expected by analysts consulted in the BC’s Focus survey, who see an expansion of just 0.8% of GDP this year.

The Minister of Finance, Fernando Haddad, and the Minister of Planning, Simone Tebet, make up the CMN alongside the President of the Central Bank. The council will have its first meeting since the new government took office next week. In the middle of the year, the CMN should set the 2026 inflation target.

Lula repeated his calls for the BC to seek to act in line with the medium and long-term macroeconomic strategy of the current management. He said that it is necessary to have fiscal responsibility, as he had in the first two terms in the Presidency, but also political, economic and, above all, social responsibility, highlighting that the last one is the one that matters most.

“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 said.

In an event in Miami in the morning, at the same time that he was the target of new attacks by Lula, the president of the BC 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.

Source: CNN Brasil