By María Eloisa Capurro
President Luiz Inácio Lula da Silva will nominate Gabriel Galípolo to the board of directors of the Central Bank of Brazil (BCB), Finance Minister Fernando Haddad informed the media this Monday (8), triggering a liquidation of local assets.
The nomination of Galípolo, executive secretary of Finance, as director of Monetary Policy will place an ally on the board. At the same time, the leftist government continues to criticize the Central Bank for its decision to maintain high interest rates.
Lula will also nominate Ailton Aquino dos Santos, a career BCB official, to be director of Supervision, filling another vacancy on the board.
All but one economist in a Bloomberg survey expects the board to keep the benchmark Selic unchanged at 13.75%.
Galípolo, whose appointment requires Senate approval, is seen among Lula’s allies as a potential replacement for current BCB chief Roberto Campos Neto at the end of his tenure in December 2024.
Meanwhile, Dario Durigan will take over from Galípolo as deputy finance minister.
Since taking office in January, Lula has criticized the Central Bank for keeping Brazil’s main rate at a record high of 13.75%, arguing that it has failed to combat inflation and has caused unemployment.
Campos Neto was nominated by former president Jair Bolsonaro, one of Lula’s biggest rivals.
A well-known figure in the financial markets and once a trader, Campos Neto has pledged to remain in his post until the end of his term.
With little chance of convincing Congress to back Campos Neto’s removal, the two board seats are Lula’s first opportunities to elect officials with a direct say on monetary policy.
Two additional seats will open in December.
LULA AGAIN CRITICIZED INTEREST RATES IN BRAZIL, SAYING THEY HOLD THE COUNTRY BACK
“Those who agree with such a high interest rate, let them come out and defend it publicly. I don’t agree with it”, said the Brazilian president in London.
Galípolo and Dos Santos will serve a four-year term if the Senate Economic Affairs Committee approves their appointment.
The committee is preparing to consider the nominations “as a matter of urgency”, said the chairman of this body, Vanderlin Cardoso, before the announcement.
The BCB autonomy law establishes that no board member can be removed from office unless authorized by senators and only in extreme circumstances.
Policymakers led by Campos Neto have not indicated that a rate cut is imminent, saying only that “patience” and “perseverance” are needed before an easing cycle.
The bank is battling expectations that consumer prices will overshoot its targets even through 2025.
Brazil’s annualized inflation has eased recently, returning to the central bank’s tolerance range of 4.16% in early April.
However, core measures that exclude the most volatile products, such as food and energy, continue to accelerate.
Policymakers warned that the eventual approval of a new public spending framework would not automatically clear the way for slower inflation.
With information from Bloomberg
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