Lula surprised by high interest rates in Brazil
2023.02.06 12:50
Lula surprised by high interest rates in Brazil
By Tiffany Smith
Budrigannews.com – With the benchmark rate at a six-year high, Brazilian President Luiz Inacio Lula da Silva stated on Monday that there was “no explanation” for the country’s high interest rates and that the development bank BNDES could assist in lowering lending costs.
Last week, Lula said that Brazil’s problem was not the central bank’s newfound independence but rather a “culture of high rates,” suggesting that the bank’s formal autonomy be reviewed.
After his remarks, local markets continued to lose ground, with the Brazilian real falling 1 percent against the US dollar in spot trading and the benchmark stock index also losing up to 1 percent.
Lula criticized the monetary policy committee’s explanation for maintaining rates at the 13.75% level, which has been in place since August, as “shameful” and urged business leaders to speak out against the current interest rate levels.
“The levels of interest rates cannot be justified. At the inauguration of Aloizio Mercadante, the new head of the BNDES, Lula stated, “We just need to look at Copom’s letter to know how shameful this rate hiking is.”
Due to Lula’s fiscal risks, the committee known as Copom said last week that it might keep interest rates high for longer than the markets anticipate.
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