MercoPress. South Atlantic News Agency

Bolsonaro praises Economy minister Guedes trying to overcome the Petrobras controversy

“Paulo Guedes is an anchor for our government,” Bolsonaro said at a ceremony in Brasilia marking the signing into law of central bank autonomy.

Brazilian President Jair Bolsonaro praised his Economy Minister Paulo Guedes as the “anchor” of his government, in an attempt to quash speculation of a deepening division between the two after Bolsonaro last week ousted Petrobras CEO triggering a plunge in markets.

Guedes, a Chicago-school trained economist and fervent free-market supporter, has not commented on Bolsonaro's intervention at the top of Petrobras, which unnerved investors and sparked a huge selloff across Brazil's financial markets on Monday.

“Paulo Guedes is an anchor for our government,” Bolsonaro said at a ceremony in Brasilia marking the signing into law of central bank autonomy.

Addressing Guedes alongside him on the stage, Bolsonaro said his commitment to fiscal discipline sends a positive signal to financial markets.

Earlier on Wednesday, ratings agency Moody's warned that Bolsonaro's decision to replace Petrobras CEO Roberto Castello Branco, (handpicked by Guedes and also US trained economist) over rising fuel prices threatened the government's privatization program and even Brazil's economic growth.

A survey of 200 institutional investors carried out by online brokerage XP Investimentos on Sunday, after Bolsonaro's Petrobras intervention, showed that a growing number think Guedes will not hold his position as economy minister after June.

The survey showed that only 13% of those polled think Guedes will definitely be in his position come the second half of the year, with the remainder attaching various probabilities to him leaving.

Almost half (49%) estimated there was a 0-25% chance of him being gone by June, almost a quarter (23%) estimated there was a 25-50% chance, and 13% attached a 50-75% probability, the survey showed.

The increase in diesel prices caused an immediate reaction from Brazilian truckers who warned about a national strike as in 2018, and overall are strong supporters of president Bolsonaro.