Haddad minimizes smaller Selic reduction and denies split between BC directors

The minister Fernando Haddadfrom Finance, minimized the divergence between the directors of the Monetary Policy Committee (Copom), of the Central Bank, who decided – with a narrow margin – reduce the Selic basic interest rate at a slower pace than expected. Last Wednesday (8), four appointed by the president Luiz Inácio Lula da Silva (PT) opted for a reduction of 0.50 percentage points, while five directors who were at the BC before, appointed by the former president Jair Bolsonaro (PL), preferred a smaller cut of 0.25.

This disagreement generated concerns among investors and analysts, who fear possible political interference in the conduct of monetary policy. There is fear that the next president of the BC, to be appointed by Lula later this year, may adopt a more lenient stance in relation to inflation to align with the interests of the Palácio do Planalto.

In response to these fears, Haddad said he does not agree with this type of assessment. He says he believes that the counselors adopted prudence because “a question of ‘guidance’ was the reason for the divergence. There was a commitment to remove the plural (from the number of expected interest rate cuts) and rethink the trajectory based on new data”, said Haddad in an interview with Estadão published on Thursday night (9).

Haddad says he considers that the divergence that raised concerns about the BC’s autonomy “is a superficial and ideological reading”, and says he considers that the people appointed by the current government “are equal or better than those who left, from a technical and I have no doubt that they will do an excellent job.”

The minister avoided commenting on the succession of the current president of the BC, Roberto Campos Neto, at the end of the year, highlighting that the next president will be appointed by Lula. Among the most popular names is Gabriel Galipolo, who was his executive secretary at the ministry and was appointed by him last year to the committee.

Fernando Haddad also reiterated his opposition to the BC’s financial autonomy proposal being processed in the Senate, defending the readjustment of civil servants as a solution to the impasse.

“There is some controversy around this, including among employees. It’s funny to talk about autonomy now as if the BC hadn’t gone seven years without an adjustment and this hadn’t penalized the institution heavily. We are bothering ourselves about this matter,” he pointed out.

He also stated that conversations about the BC’s financial autonomy are ongoing “without prejudice and in the correct instances”, and that the issue must be resolved in an “institutional way”.