‘This increase in interest rates is a shame’, says Lula in new criticisms of the Central Bank

President Luiz Inácio Lula da Silva (PT) reinforced, this Monday (6th), the criticism of the actions of BC (Central Bank) and said that the current interest rate in the country, the Selic, is a disgrace.

“There is no justification for the interest rate to be at 13.5% [ao ano]. Just look at the letter from the Copom for us to know that this interest rate increase is shameful,” said Lula.

The demonstration took place during the inauguration of the new president of the BNDES, Aloizio Mercadante, in Rio de Janeiro. Mercadante said that Brazil cannot just be an exporter of agricultural commodities and that it cannot just be the ‘farm of the world’.

“The problem is not an independent bank, it is not a bank linked to the government. The problem is that this country has a culture of living with high interest rates,” stated Lula.

The president also called on sectors such as the business community to make demands on interest rates in the country. Lula said that the “business class needs to learn to demand, to complain about high interest rates”.

“When the Central Bank depended on me, everyone complained. The only day Fiesp [federação da indústria] spoke was when interest rates increased. It was the only day […]. Now, they don’t talk.”

Last Wednesday (1st), the Central Bank’s Monetary Policy Committee (Copom) maintained the basic interest rate at 13.75% per year for the fourth consecutive meeting – the first since President Lula took office. The monetary authority also signaled that it should leave interest rates at the current level for a longer period.

The president and ministers consider that the president of the Central Bank, Roberto Campos Neto, betrayed the confidence of the government, which counted on the body to participate in a joint effort for Brazil to overcome the current economic problems without going through a recession, as shown by the column by Mônica Bergamo.

Lula’s criticisms of the BC’s management, however, have increased inflation expectations and pressured interest rates, generating an effect contrary to that intended by the government.