Central Bank has autonomy, but it is not untouchable, says Lula

President Luiz Inácio Lula da Silva again criticized, this Saturday (6), the level of the Selic rate, the economy’s basic interest rate, which is currently at 13.75% per year in Brazil. For the sixth time in a row, in the last week, the Monetary Policy Committee (Copom) of the Central Bank (BC) did not change the rate, even with pressure from the federal government for its reduction. Lula stated that he does not discuss the BC’s autonomy, but criticized the commitment of its president, Roberto Campos Neto, with the law that guaranteed the autonomy of the autarchy. “Who is he committed to, Brazil? No, he has a commitment to the other government that appointed him [do ex-presidente Jair Bolsonaro], this needs to be made clear. And he is committed to those who like high interest rates, because there is no other explanation,” said Lula, in London, at a press conference after attending the coronation of King Charles III. Under the law that granted autonomy to the BC, the directors have four-year terms. The text provides that the fundamental objective of the entity is to ensure price stability, that is, inflation. In addition, it must also ensure the stability and efficiency of the financial system, smooth fluctuations in the level of economic activity and promote full employment. “If I, as president, cannot complain about the mistake made by the president of the Central Bank, who will complain, the American president? So, excuse me, the Central Bank has autonomy, but it is not untouchable”, reinforced Lula. “If you are committed to economic growth, committed to job creation and committed to inflation, take care of all three. With interest at 13.75%, the other two [atividade econômica e fomento ao emprego] will not be fulfilled”, evaluated the president. Although they stopped rising in August last year, interest rates are at the highest level since the beginning of 2017. The effects of monetary tightening are felt in the rise of credit and the slowdown of the economy. The Selic is the BC’s main instrument to contain inflation. When the Copom raises the basic interest rate, the purpose is to contain heated demand, and this affects prices because higher interest rates make credit more expensive and stimulate savings. Thus, higher rates can also make it harder for the economy to expand. “Brazilian society, Brazilian retailers, Brazilian entrepreneurs, Brazilian workers can no longer support the interest rate. Unemployment is starting to show its face in the commerce sector, many stores are going out of business, they are closing. So, if we want to create jobs in the country, we will have to have credit for the worker, on payroll, for the small and medium individual entrepreneur, we will have to have credit for the big companies, otherwise the country will not grow”, he said. . “The economy will grow because we are putting money into the worker’s veins, we are resuming all the public policies that have worked. And if the money is not flowing in the worker’s pocket, there is no job, there is no improvement in the quality of life in Brazil, or anywhere else in the world”, reinforced Lula. In recent statements, Campos Neto defended that the autarchy’s decisions are technical. He even sees with optimism the government’s projects to balance public accounts, which impact on inflation estimates. Trade relations Lula landed on Friday morning (5th) in the English capital and in the afternoon met with the Prime Minister of the United Kingdom, Rishi Sunak. No agreements were signed, but, according to the president, the two countries will set up a working group to deal with the increase in trade relations. “A good trade relationship policy is a two-way street, you cannot want to have a very large surplus with a country, what is important is that there is a certain balance and I think that Brazil explores very little the sales potential that England has for Brazil and I think that England explores very little potential of things that Brazil has to sell”, he said. “After England left the European Union, I think this market increased in an extraordinary way for Brazil”, added Lula. Last year, bilateral trade moved US$ 6.5 billion, an increase of 15% compared to 2021. Brazilian exports to the British totaled US$ 3.7 billion, but represent less than 2% of the total foreign sales of the country. Imports were US$ 2.8 billion. The balance is favorable to Brazil. The UK’s most invested areas are extraction, finance and transport.

Agência Brasil