The leader of the government in the Senate, Jaques Wagner (PT-BA), says that President Luiz Inácio Lula da Silva’s criticism of the country’s interest rate reflects what the majority of the population thinks. He claims, however, that the government will not interfere with the autonomy of the BC (Central Bank).
“The president is saying what the majority of Brazilians think: interest rates in Brazil, the way they are, are inhibiting productive investment, job creation,” declared the senator to Sheet.
For weeks, Lula has been criticizing the BC’s performance in defining interest rates. This Monday (6), he said that the current level of the rate “is a shame”.
Lula’s statements generated distrust about the risk of pressure on the bank’s decision-making process and a possible change in the rules of autonomy. According to Wagner, the president has no plans to change the BC’s status.
“He does not intend to disrespect either the mandate or the autonomy of the Central Bank. This is not the debate that is underway,” he said.
Other members of the government have already tried to soften Lula’s lines, but the president continues to criticize the autarchy.
The government leader added that the chief executive’s criticism should not be interpreted as a form of pressure. “The president is voicing his opinion. It doesn’t mean he expects a consequence.”
Wagner defended, however, a dialogue between the BC and the Ministry of Finance to define the bank’s policies.
“It is evident that the Minister of Finance [Fernando Haddad] he will dialogue all the time with the president of the Central Bank, respecting his autonomy – which does not mean that each one is in a different world”, he said. “No one solves these things just in their own head.”
The Bahian senator defended that the BC should take into account factors beyond monetary stability when deciding the interest rate.
“Central banks around the world are rethinking many things. Many central banks, in addition to being concerned with the monetary issue, with inflation, are also concerned with social stability,” he stated.
Lula and some ministers accuse the president of the Central Bank, Roberto Campos Neto, of having betrayed the trust of the government, which relied on the body to overcome the current economic problems without going through a recession, as Mônica Bergamo’s column showed.
Last Wednesday (1st), the Copom (Monetary Policy Committee) 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.
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.
In an interview with Rede TV!, last week, the PT referred to the head of BC as “that citizen”. Campos Neto has a mandate as president of the bank until December 31, 2024.
Wagner denied that there are pressures for the BC head’s early departure. “He has a mandate, we are not going to usurp his mandate. In my opinion, it makes no sense. I don’t see how the president can break with the legality he received. In some things, in what is his right, he will try to work to change. It’s not worth this fight.”
The president of the BC can be dismissed at the request or if he is convicted of administrative impropriety or of a crime whose penalty prohibits access to public office. He may also leave office when he performs insufficiently to achieve the BC’s objectives. In this case, the President of the Republic decides, with the approval of the Senate in a secret ballot.
UNDERSTAND: AUTONOMY OF THE CENTRAL BANK
- What is Central Bank autonomy?
The rule disassociated the BC from the Ministry of Economy and made it an autarchy of a special nature. The main change was the creation of fixed terms of four years, with the possibility of reappointment, which distances the body from political influence.
- When was the BC autonomy law passed and why?
With the aim of shielding the institution from government interference and creating fixed mandates, the bill was approved in 2021 and then sanctioned by then-president Jair Bolsonaro (PL).
- Can board members be fired?
They can leave office when they perform insufficiently to achieve the BC’s objectives, with a decision by the President of the Republic and the approval of the Senate in a secret ballot being necessary. They may also be exonerated at their request or if they contract a disease that makes it impossible to hold their position. In addition, they may be dismissed if convicted, by means of a final and unappealable decision or issued by a collegiate body, for the practice of administrative impropriety or a crime whose penalty temporarily prohibits access to public office.
- How was the first term defined fixed?
The president and two directors will have terms until December 31, 2024, and the others will end their periods in a staggered manner. Two of them have already ended their term on December 31, 2021. The next two end on February 28, 2023; and two others, on December 31, 2023.
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