Campos Neto says he has lessened market fears with Lula’s eventual victory

The president of the Central Bank, Roberto Campos Neto, said this Monday (14), in an interview with journalist Miriam Leitão (GloboNews), that the market is less afraid of the transition from one government to another.

“There are several prices that show the risk of passing from one government to another. And more recently, when we look at these prices, they have softened, dropped a little. It means that the market has become less afraid of passing from one government to another “, he said.

Campos Neto’s answer was to the question about the possibility of turmoil in the event of ex-president Luiz Inácio Lula da Silva (PT) victory. Leitão asked if an eventual victory for PT is already “priced in” by the market.

For the BC president, the market reaction probably occurs because a possible government that represented a risk of more extreme measures is moving to the center.

“It is not appropriate to comment on what each candidate would be. So our interpretation is based on market prices”, he said.

Now the favorite in the presidential race, Lula has said that he does not want to be the candidate of the PT or of the left only, but of “a movement” with greater reach, including social forces.

Campos Neto considered, however, that it is still too early to talk about an election and highlighted the BC’s autonomy, which separates the political and monetary cycles.

He highlighted that the completion of the process that guarantees autonomy took place in the current government and cited the help of the National Congress for this.

He also stated that he will strive to stay in office until the end of the government of President Jair Bolsonaro (PL) to solidify independence.

Campos Neto was careful to respond about the possibility of an investor boycott in the face of increased deforestation in the Amazon. In his analysis, sustainability is a desire of society and the post-Covid will be marked by the desire for sustainable and inclusive growth and this reflects in the decisions of investors. He highlighted the BC’s “green agenda” and avoided criticism of the Bolsonaro government on the subject.

In October 2021, the BC president stated that climate and environmental shocks could have lasting effects on the economy. According to him, in the long run, these factors affect productivity, growth and interest rates. For Campos Neto, these shocks can affect the supply of products and services, with an impact on inflation.