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Montevideo, February 29th 2024 - 01:57 UTC

 

 

Lula insists in criticizing central bank autonomy: current rate of 13,75% is “irresponsible”

Wednesday, March 22nd 2023 - 10:35 UTC
Full article 5 comments
Lula has repeatedly argued that the central bank autonomy as “nonsense”. “What I want to know is the result of the high rate” Lula has repeatedly argued that the central bank autonomy as “nonsense”. “What I want to know is the result of the high rate”

Brazilian President Luiz Inacio Lula da Silva criticized on Tuesday the country's central bank, saying that an interest rate of 13.75% - its current level - is “irresponsible,” adding he will continue to fight the current level to stimulate the economy.

Brazil's central bank has been holding its benchmark interest rate at a six-year high since September and, is expected to maintain it unchanged at Wednesday's COPOM meeting.

President Lula defends a reduction in the country's basic interest rate, the Selic, while banker Roberto Campos Neto prefers to keep it at 13.75%. Under the current chart of the Brazilian central bank, (approved under previous president Jair Bolsonaro), the terms of the chairperson do not coincide with those of the elected government. In effect Campos Neto constitutional term finalizes at the end of 2024.

Lula has repeatedly argued that the central bank autonomy as “nonsense”. the president said that if the Brazilian Central Bank's autonomy brings “an extraordinarily positive thing”, it can be maintained. “What I want to know is the result of it. Will the result be better? An autonomous Central Bank will be better, improve the economy, great, but if it doesn't improve, we have to change it,” he said.

Lula also anticipated a proposal for new fiscal rules but will be only announced after he visits China next week. The new framework is considered crucial to addressing fiscal concerns after Lula secured congressional approval for a multi-billion-real package that bypasses the constitutional spending cap to boost social spending and fulfill campaign promises.

Finance Minister Fernando Haddad had previously indicated the proposal would be unveiled this month, possibly even before the central bank's rate-setting decision on Wednesday.

However, in an interview with local news website Brasil 247, Lula said it wouldn't make sense to announce the fiscal framework and then travel to China.

“What I have been calling attention to is that we have to do things very carefully because we cannot lack resources for education and health,” said Lula, emphasizing that he would talk about the issue with Haddad during the trip. Lula will be in China from March 26-30.

Lula's chief of staff, Rui Costa, said in an interview with TV GloboNews on Tuesday the framework would be announced in mid-April.

Categories: Economy, Politics, Brazil.

Top Comments

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  • Brasileiro

    Because the Brazilian ruling class, which lives in the luxury of Miami, needs to keep stealing from Brazil to maintain its extremely high standard of living in Florida.

    Our struggle is to lower real interest rates and force them to invest in Brazil. Or else, that they stop being Brazilians.

    I am not a communist, but what is happening in Brazil today is a class struggle. We are very late. This happened in Europe in the 19th century.

    Mar 22nd, 2023 - 01:35 pm +1
  • Pugol-H

    With a current inflation rate of only 5.60%, he may well have a point, why is the interest rate so high???

    Mar 22nd, 2023 - 12:54 pm 0
  • Jack Bauer

    Pugol-H
    Hello there ! good to see you well !

    During the Covid-19 pandemic, the Bolsonaro administration paid out big sums of cash to parts of the population, to help those who had lost their jobs and mainly, to keep them fed....these extra expenses came at a cost...they fueled inflation...to control it, while trying the keep the economy on the right track - which was relatively successful considering the world's economic situation, aggravated by Russia's invasion of Ukraine - the Central bank increased the prime rate (SELIC). While the inflationary pressure doesn't drop, it's the only way to curb spending....impopular but necessary. No doubt it has its impact on business (and new investments etc)- it is how central banks go about trying to solve the problem....and, just as a bonus, the president of our Central bank is Roberto Campos Neto, currently recognized as one of the best central bank presidents.
    It is no surpise that the leftist, nine-fingered, brain-dead ex-con is ranting 'n
    raving about the interest rate, because it is a well known fact he cannot bear the idea that he cannot control the independent central bank, which is supposed to control the value of our currency.
    it is also his way of preparing a narrative, to defend himself when the economy tanks under his incompetent leadership....he's just repeating the same ole shite that Dilma did while she was president (with the ex-con's full support, as she was always his sock-puppet). The ex-con made several promises during his campaign, many impossible to achieve unless he manages to manipulate the Constitution into allowing him to spend way more than the revenue from federal taxes...he has done away with the spending ceiling, substituting it with a new law that he is wary of announcing, as it looks like the fastest way for the economy to go down the drain...during these first almost 90 days, his administration has been a disaster, and promises to get worse. He has learned nothing and wants revenge.

    Mar 22nd, 2023 - 05:25 pm -1
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