The president of the Central Bank, Roberto Campos Neto, recognized this Wednesday (27) that the basic interest rate of the Brazilian economy, the Selic, is at a higher level than ideal. Campos Neto gave a talk about interest at a hearing at the Finance and Taxation Committee of the Chamber of Deputies. Campos Neto’s speech took place hours before he met for the first time with President Luiz Inácio Lula da Silva (PT) in his third term.
The meeting between Campos Neto and Lula is scheduled for 5:30 pm. Lula has already criticized the BC president because of the Selic level. Campos Neto was nominated to the BC by former president Jair Bolsonaro (PL).
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Today, the Selic rate in Brazil is 12.75% per year. It has fallen 1 percentage point since August. Even so, according to Campos Neto himself, it is today the second highest real interest rate (interest minus inflation) in the world, behind Mexico.
High interest rates harm investments because they make loans and financing more expensive. This hinders the growth of the economy.
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In the Chamber, Campos Neto stated that “in fact, interest rates in Brazil are high”. “I would like interest rates to be lower,” said he, who has a vote on the Monetary Policy Committee (Copom), which sets the Selic level.
In his presentation, Campos Neto argued that the Selic rate in the country is high today to control inflation generated by the new coronavirus pandemic. It is high, historically, because Brazil has higher public debt and a lower savings rate than other emerging countries, which tends to increase the risk on its debt securities.
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Regarding public debt, Campos Neto stated that the Union’s control of public spending contributes to reducing the basic interest rate. He defended the government’s goal of closing the fiscal deficit in 2024.
This argument, in fact, was criticized by federal deputy Lindbergh Farias (PT), author of the request for Campos Neto to be invited to the Chamber of Deputies session.
Lindbergh stated that the BC wants to be the government’s “guardian”, establishing standards for federal spending, which it does not have the power to define. “It seems like you think you are president of the Republic”, he criticized him.
Relationship with bankers
The deputy also criticized Campos Neto’s proximity to bankers. According to him, the BC president should receive more congressmen and representatives from the productive sector to obtain their opinion on the country’s interest rate.
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Campos Neto said he is open to receiving anyone who asks him for an audience. He said that the BC is in discussions so that meetings of its directors can be broadcast to increase its transparency.
After listening to Lindbergh’s criticisms, Campos Neto stated that he works in partnership with the federal government to improve the national economy.
Editing: Rodrigo Durão Coelho