After Lula’s criticism of central bank independence, future interest rates skyrocket
Futures interest rates started high this Thursday, Jan. 19, after criticism from president Luiz Inácio Lula da Silva (PT, progressive-globalist) to the independence of the Central Bank (BC) and the current inflation target, defined by the National Monetary Council (CMN).
In an interview with GloboNews, Lula questioned the purpose of an independent Central Bank “if inflation and interest rates are the way they are” and also declared that the inflation target for this year (3.25%, possibly reaching 4.75%) is exaggerated and forces a “squeeze” on the economy with interest rate increases.
In 2022, inflation closed at 5.79%, according to the official index calculated by the Institute of Geography and Statistics (IBGE).
The future interest rates, representing a market expectation about the interest rate between the negotiation day and a future date, shot up this morning.
There was an upward adjustment in the rates until 2026. The Stock Exchange also registered a 1.18% increase in the dollar and an 11% drop in the Ibovespa future.
In the GloboNews interview, Lula said he was irritated with those who ask for fiscal discipline without concern for the social area.
“I can tell you, with my experience, it’s silly to think that an independent Central Bank president is going to do more than when the president was the one who appointed him.”
The president also said he doubts that the current president of the Central Bank, Roberto Campos Neto, is more independent than Henrique Meirelles, who presided over the monetary authority during Lula’s first two terms, between 2003 and 2010.
“Why is the bank independent and inflation and interest rates the way they are?” he questioned.
Since the campaign, Lula has revealed little concern with the fiscal area and has always made it clear that he would revoke the spending cap, for example.
Even before taking office, in coordination with Congress, he approved the PEC of Spending, increasing public spending by R$145 (US$27) billion.
In addition, the PT government is articulating to make the State Law more flexible and allow political appointments for executive and board positions.
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Live Market IntelligenceBrazil — Live Market Board
Rio Times · Live Market Intelligence
Brazil — Live Market Board
-0.27%
183,476.86
-0.27%
64,992.23
+1.13%
11,255.90
-0.39%
2,893,751
-1.57%
2,584.72
-0.95%
59,934.37
+1.27%
| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| IBOV | 183,476.86 | -0.27% | +21.85% | 183,965.91 | 168,310 | 167,142 | — |
| USD/BRL | 5.16 | +0.01% | -5.13% | 5.16 | 5.18 | 5.14 | — |
| SELIC | 14.00% | — | — | — | — | — | |
| PETR4 | 41.64 | -0.05% | +35.19% | 41.66 | 41.97 | 41.15 | 41,499,400 |
| VALE3 | 72.97 | +0.83% | +30.75% | 72.37 | 73.54 | 72.66 | 17,658,000 |
| ITUB4 | 38.60 | -1.03% | +4.57% | 39.00 | 39.34 | 38.39 | 29,487,800 |
| BBDC4 | 16.85 | +0.36% | +3.50% | 16.79 | 16.90 | 16.67 | 19,416,900 |
| BBAS3 | 19.37 | +0.47% | +0.73% | 19.28 | 19.44 | 19.16 | 11,069,200 |
| B3SA3 | 14.26 | -0.21% | +12.73% | 14.29 | 14.47 | 14.11 | 33,037,800 |
| ABEV3 | 14.89 | -0.80% | +21.91% | 15.01 | 15.07 | 14.81 | 16,453,100 |
| WEGE3 | 47.59 | +0.49% | +29.99% | 47.36 | 48.08 | 47.36 | 3,364,600 |
| PRIO3 | 59.14 | -0.19% | +50.67% | 59.25 | 59.81 | 58.74 | 3,325,600 |
| SUZB3 | 41.33 | +2.35% | -23.55% | 40.38 | 41.48 | 40.35 | 3,914,900 |
| RENT3 | 34.68 | -0.09% | +0.84% | 34.71 | 34.96 | 34.35 | 7,979,100 |
| AZZA3 | 15.89 | -2.63% | -53.76% | 16.32 | 16.42 | 15.82 | 1,330,300 |
| CSNA3 | 4.30 | +0.47% | -42.65% | 4.28 | 4.41 | 4.26 | 10,076,100 |
| GGBR4 | 24.69 | +2.19% | +51.38% | 24.16 | 24.85 | 24.18 | 7,047,600 |
| ENEV3 | 24.21 | -1.38% | +70.49% | 24.55 | 24.64 | 23.99 | 9,297,000 |
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