Brazil: there is “no magic” to reduce interest rates, says Central Bank’s president

By Anderson Scardoelli

The president of the Central Bank (BC), Roberto Campos Neto, said the president of the Republic, Luiz Inácio Lula da Silva, has the right to speak about the current level of the basic interest rate in the country, the Selic.

However, he emphasized that the agency cannot be held responsible for Brazil’s economic situation.

“[There is] no magic, no silver bullet,” said Campos Neto concerning the reduction of the Selic by the Central Bank.

His speech was recorded on Tuesday, 25, during a public hearing in the Strategic Affairs Commission (CAE) of the Federal Senate.

Currently, the basic interest rate is 13.75% per year.

The Central Bank’s Monetary Policy Committee (Copom) sets the level monthly.

Lula has publicly criticized the Selic level.

Campos Neto, however, has a different opinion from the president.

To the senators, he listed actions responsible for a country’s economic expansion.

For example, the BC president spoke of fiscal balance and public accounts on time.

Campos Neto also publicly defended implementing the three structural reforms: administrative, fiscal, and tax.

In the Senate committee, Roberto Campos Neto said it is necessary to control inflation – which can be done on the Central Bank’s side by raising interest rates when deemed necessary.

“In Brazil’s economic policy tripod, we have a target system, a floating exchange rate, and we have to have a tripod of fiscal responsibility,” said the president of the Central Bank.

“This is the design of the system in every country in the world, and the fiscal part influences a lot what the Central Bank does, through expectations, and, if it is not met, the Central Bank has to write a letter, even with an eventual punishment, as is established by law,” added Campos Neto.

With information from Revista Oeste