Signaling that the cycle of raising the base interest rate (Selic, currently at 6.25% per annum versus 2.0% in force until March) could end at a higher level than originally anticipated, as suggested at By September meeting of the Committee on Monetary Policy (Copom) The Central Bank (BC) may face political pressure. This is because in order to raise the base rate to a higher level, BC will be able to enter an election year with a full tightening of monetary policy. The situation may indicate the autonomy of the monetary authority signed in February. Economists have heard
State
However, we will bet that BC is protected.
According to Jos Jlio Senna, former director of British Columbia and head of the Center for Monetary Research at the Brazilian Institute of Economics, the Getlio Vargas Foundation (Ibre / FGV), the formal autonomy established by law serves to “protect” the council of monetary authorities. Without this, market agents have always doubted whether the director could be fired if he resisted political pressure. “If it weren’t for autonomy (by law), the pressure on BC might have become difficult to resist,” Senna said.
According to Srgio Vale, chief economist at the consulting firm MB Associados, protection will be needed because political pressure will arise. This is because, he said, it is “highly likely” that President Jair Bolsonaro will continue to “highlight” the economic outlook with his statements. “The noise is inevitable. This government is made of noise. It will be difficult not to achieve BC and monetary policy, but there is a certain degree of protection, both from the law itself and from the Minister (Economy, Paulo) Guedes, who can serve as a shield.” – he declared.
Silvio Campos Neto, senior economist at Tendencias Consultoria, does not see the rise in interest rates as an election-related issue. He believes the bull cycle will end in 2022 and that fiscal rules are now more relevant to political debate. “In Brazil, when elections are close, it’s normal for British Columbia to stay out of the way and ultimately not make significant changes to monetary policy,” he said.
Information from the newspaper
State of Sao Paulo.
