The president of the central bank, Roberto Campos Neto, has called the idea that Brazil does not currently have demand-driven inflation a “mistake”, as some members of the government have defended, including President Luiz Inácio Lula da Silva himself.
In an interview on CNN’s “Paths with Abilio Diniz” program, held last Tuesday and aired this Friday, Campos Neto said that various scientific articles show that inflation today is “much more demand than supply”.
At the same time, Campos Neto said it is not true that, if inflation is on offer, the central bank should not change the interest rate. According to him, the institution also has to fight the secondary effects of supply inflation.
“If it contaminates the chain, then the central bank has to come in and fight this scenario,” he said.
Campos Neto was also questioned about the appointment of the current Finance Ministry executive secretary, Gabriel Galípolo, to the BC’s monetary policy board. Right arm of Finance Minister Fernando Haddad, Galípolo was chosen by Lula for the council, without Campos Neto having participated in the discussions.
“The rules of the game are these, there will be a director or several directors who will have different opinions,” minimized Campos Neto. “What we need to improve in Brazil is knowing how to live with the rules instead of changing them.”
Campos Neto also stressed that the inflation target is not determined by the BC, but by the National Monetary Council (CMN), which has a governing majority. He recalled that, by law, the BC must achieve the goal, even if the institution is trying to smooth out the process as much as possible.
Campos Neto’s comments come amid government pressure for the CB to begin the process of cutting the base Selic rate, currently at 13.75% annually. The BC, in turn, has defended in its communications that inflation expectations remain elevated.
Earlier this year, President Lula himself came up with the idea of changing the inflation target, which in theory would have helped create room for the Selic rate cut. Campos Neto, in turn, has always been against the change of goal.
“Since the first conversation I had there with Haddad and Lula, before taking office, I said: ‘one of the things we shouldn’t talk about in public is the goal,'” Campos Neto said in the interview. of this Friday. .
“It happens that, since the Executive has the pen to change targets, when the market speaks it understands that the government will change targets… And when you talk about targets, you end up changing expectations”.
During the interview, Campos Neto also stated that he will leave the presidency of the BC at the end of 2024, as foreseen by the law on the autonomy of the institution. He ruled out the possibility of being reconfirmed in office. The president of the BC said he was against the possibility of reappointment, despite the fact that the law allows it.
Campos Neto also said that, given the politicization of the BCB’s monetary policy decision discussions, the autarky had taken care to explain its interest rate decision-making process in more detail, particularly in the minutes of the Policy Committee meetings monetary (Copom) .
Source: Terra
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