Brazilian Senate summons central bank president to explain high interest rate

The Brazilian Senate has approved a summons for the president of the Central Bank, Roberto Campos Neto, to provide an explanation for the country’s current annual basic interest rate of 13.75 percent, considered the highest real rate globally.

The request was endorsed by the Senate Economic Affairs Committee after the Central Bank’s Economic Policy Committee decided to maintain the interest rate at 13.75 percent, citing concerns about potential inflationary pressures beyond their control.

Campos Neto, appointed by former President Jair Bolsonaro and holding a parliamentary mandate until 2024, has faced calls for resignation from President Luiz Inácio Lula da Silva’s Workers’ Party.

According to Agencia Brasil, the ruling party has garnered support from the opposition in requesting an invitation for Campos Neto to explain the interest rate.

Campos Neto argues that the objective is to achieve the inflation target of 3.25 percent for 2023, with a tolerance of up to 4.75 percent.

Senator Randolphe Rodrigues, head of the ruling bloc in the Senate, stated that Lula’s parliamentary base does not rule out further actions against Campos Neto.

The interest rate level has faced criticism from various political factions, particularly from major industry leaders.

Vice-President Geraldo Alckmin, who also serves as Minister of Development, Industry, Foreign Trade, and Services, expressed concerns that the interest rate level contributes to a fiscal deficit by increasing the government’s expenditure on Brazilian bondholders affected by the measure.