Brazil Announces New Central Bank President

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – The new finance minister of Brazil, Henrique Meirelles, announced Tuesday morning the appointment of Ilan Goldfajn as the new Central Bank president as part of the government’s plan to revamp the country’s ailing economy. Meirelles also announced that the government would seek Congressional approval to grant the Central Bank formal technical autonomy from the government.

Goldfajn the chief economist for Itau Bank, one of Brazil’s largest private financial institutions, will replace Alexandre Tombini as head of the institution. He was the Central Bank’s economic policy director between 2000 and 2003 and is considered a conservative economist by analysts. An MIT graduate Goldfajn is well liked and respected by US’s Wall Street and international markets.

As for the technical autonomy sought for Brazil’s Central Bank, Meirelles said that the current government seeks to make formal a verbal condition the institution has been granted for the past several years.

For Neil Shearing, Chief Emerging Markets Economist at Capital Economics, although a technical autonomy is not the same as full independence from government, it is ‘a positive step and a quick win for the government, and should help to anchor long-term inflation expectations’.

Brazil’s Finance Minister stated that in the next few days details would be revealed about government plans to narrow the double-digit budget deficit. The government is expected to announce a new pension reform in the next month and analysts say that an increase in taxes or the creation of new taxes may be in store for Brazilian taxpayers, as the government tries to increase its revenues.

Meirelles also told journalists during the announcement that he is analyzing whether or not to change the heads of public banks, such as Banco do Brasil, Caixa Economica Federal and Banco do Nordeste.

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