His statements come in the middle of a dispute between President Luiz Inácio Lula da Silva and the head of the Central Bank, Roberto Campos Netoin which the leftist leader affirms that the current rate levels hinder economic growth of the country and that the inflation targets are too low.
The Central Bank, which interrupted its aggressive monetary policy cycle in September after 12 consecutive climbs, he had already stated that he was considering keeping interest rates at a maximum of six years, longer than markets expect, due to fiscal risks under Lula’s tenure.
The monetary entity established an annual inflation target of 3.25% in 2023, with a margin of tolerance of 1.5 percentage points above or below that value. Campos Neto said that he refused to review the established goals.
Campos Neto, admitted last week that provides information to former ministers of Jair Bolsonaro in a WhatsApp group and warned President Luiz Inácio Lula da Silva that there is a risk in the financial market in case of changing the inflation target to reduce the interest rate as the government seeks.
Haddad had already said that the National Monetary Council – the government’s top economic policy body – would not discuss changing inflation targets at its long-awaited monthly meeting on Thursday.
On Wednesday, the minister also stressed that the new fiscal framework of the country should be presented by the new government in Marchcompared to the previous term of April.
He added that the Tax Reformanother of its priorities, is important not for its immediate effects, but for dissipate legal fiscal risks in Brazil.
The president of Brazil proposed at the beginning of the month to the Congress a tax reform to face the fiscal imbalance, and one of the men of weight of the ruling party in the legislature estimated that it can be approved before the end of the year. In addition, he expressed his intention to review the autonomy of the Central Bank. Lula also criticized the “destructive effects of the spending ceiling”a constitutional clause that had “destructive effects on social policies and became innocuous as an instrument of fiscal control.”
Source: Ambito
