The Brazilian government has announced that it will propose two new candidates to head the Central Bank, at a time when Brazilian President Lula da Silva is embroiled in a dispute with the institution over monetary policy.
The two candidates, whose nominations must be approved by the Senate, are Gabriel Galípolo, who holds a high position in the Ministry of Finance, and Ailton de Aquino Santos, a career official at the Central Bank, Finance Minister Fernando Haddad announced. .
If the senate approves the nominations, Galípolo will be director of monetary policy and Santos will be in charge of auditing the central bank. Both will join the nine-member committee that decides the country’s interest rate. In making the announcement, Haddad said that these appointments are aimed at promote the “convergence of economic policy” between the government and the Central Bank.
The news impacted the exchange market, causing the devaluation of the real against the dollar, in the expectation that the possible new members of the Central Bank will promote the reduction of interest rates.
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Two hours before the end of the session, the dollar was trading at 5.01 reais, with a devaluation of 1.38%.
Since taking office on January 1, Lula da Silva has been harshly and constantly criticizing the Central Bank for keeping interest rates at 13.75% per yearthe highest level since 2016, something that is affecting the credit market, consumption and the economy as a whole.
In the last meeting, held last week, the Central Bank decided to keep interest rates at 13.75%, arguing that inflation is “resilient” and that there are still “uncertainties” in the national and international economy.
Inflation in Brazil is 4.65% in annual terms, but the issuer believes it will rise to 5.8% by the end of 2023while expecting the economy to grow 1.2% this year.
Source: Observadora
