MercoPress. South Atlantic News Agency

Brazil: Haddad says Selic adjustment stemmed from Campos Neto era

The measure was heavily criticized by Congressman Farias

After Brazil Central Bank's (BCB) Monetary Policy Committee (Copom) raised Wednesday the benchmark Selic interest rate from 13.25% to 14.25% annually, Finance Minister Fernando Haddad warned that such a move had been planned since December under former BCB President Roberto Campos Neto, who had been appointed during the Jair Bolsonaro years.

The minister also noted that current BCB President Gabriel Galípolo chosen by Luiz Inácio Lula da Silva of the Workers' Party (PT) followed in on these projections which included two 1% increases in January and March.

“This increase actually had guidance at the end of last year. That's what happened. There was guidance, the president of the Central Bank [Gabriel Galípolo] said at a press conference that the guidance would be observed,” Haddad said.

However, the Copom's decision faced criticism from within the ruling PT party, notably from Congressman Lindbergh Farias, the bloc's Lower House leader, who called the rate hike a mistake, arguing it harms Brazil’s economy and fiscal health, with each 1% increase adding roughly R$ 50 billion (US$ 8.85 billion) to public debt interest costs.

Farias criticized the policy as contradictory to fiscal adjustment goals, claiming it creates a “real hole” in public accounts and urging an urgent review of the Central Bank’s approach, despite its hands being tied by the prior December guidance.

“This monetary policy is a mistake with harmful impacts for the Brazilian economy and also for the fiscal issue in our country. Every % increase in the basic interest rate means an increase in spending on interest on the debt of around R$ 50 billion. The market defends fiscal adjustment, but at the same time presses for a monetary policy that causes a real hole in the public accounts,” wrote Farías on X.