Native of private sector can become director of monetary policy of Bank of Brazil
2023.01.30 14:46
Native of private sector can become director of monetary policy of Bank of Brazil
By Ray Johnson
Budrigannews.com – On Monday, Brazil’s Finance Minister Fernando Haddad said that the new monetary policy director of the central bank could come from the private sector. This should show how the president works with policymakers because it will be closely followed.
After attending an event hosted by Brazil’s largest industry association, Fiesp, Haddad informed journalists that the matter was discussed in a morning meeting with central bank governor Roberto Campos Neto.
Haddad stated:
“You have few places to look for good technical names, so it can be from the private sector or the public sector.”
Next month marks the end of Bruno Serra’s tenure as monetary policy chief. His department is regarded as one of the most important because it is in charge of the foreign exchange and interest rate desks, which provide crucial inputs for monetary policy decisions.
Campos Neto will hold office until December 2024 in accordance with a formal autonomy agreement that Congress approved in 2021. The leftist President Luiz Inacio Lula da Silva will be in charge of appointing all nine members of the bank’s nine-member board. His current directors’ mandates will expire in varying amounts of time until 2025.
Without providing any additional information, Haddad stated that he and Campos Neto had agreed to end all stalled central bank credit initiatives.
He also mentioned eight proposed bills that are “ready to be forwarded” in Congress, one of which modernizes bank credit guarantees and should be up for vote in the Senate soon.
The popular Pix instant payment system would become a credit instrument this year, according to the minister, who insisted on the significance of consumer credit as an economic activity booster.
Additionally, he stated that he was in favor of a distinct approach to encourage businesses and ensure the entry of new players into the credit market. Nonetheless, he referred to the high benchmark Selic interest rate in Brazil, which is currently 13.75 percent, as an “obstacle.” This week, the central bank will meet to make a policy decision.
“Clearly, we face the Selic issue, which presents a challenge for each of us. “The Selic will always be an obstacle to a consistent reduction in interest rates and the democratization of credit,” he stated. “You can reduce the lending spreads and improve the guarantee system.”
Haddad said that in the short term, he will work toward a “virtuous balance” between the exchange rate and interest rates.
He argued for a national reindustrialization that takes climate change into account. He also said that the government has “a lot of interest” in pre-salt gas, so gas could help speed up the planned energy transition.
He added that ethanol would “naturally develop” if the pricing policy of the state-owned oil company Petrobras was adjusted.
