Roberto Campos Neto, the head of Brazil’s central bank, has stated that the current rate at which they are lowering interest rates is fitting for the present situation. This comes after the central bank reduced its main lending rate by 50 basis points in its two most recent meetings and indicated that more cuts may be on the way.
In an interview with Globo TV, Campos Neto explained that the central bank’s decision is supported by their belief that inflation is moving in a positive direction, providing the reasoning behind their choice to implement 50-basis-point rate cuts during each meeting.
In August, the central bank lowered interest rates for the first time in three years. This decision came after keeping rates steady for nearly a year, during which they had raised rates by a significant 1,175 basis points to combat rising inflation. The central bank is determined to take strong measures to bring consumer prices back in line with their target.
By mid-September, annual inflation had dropped to 5%, which is a notable slowdown from the peak of 12.20% observed in May of the previous year. The central bank’s inflation target for 2023 is 3.25%, with a margin of 1.5 percentage points either way. This target will be further adjusted to 3% next year.
Campos Neto, the head of Brazil’s central bank, has faced criticism from President Luiz Inacio Lula da Silva for maintaining high interest rates, which the president believes are holding back economic growth. However, they recently had their first meeting since President Lula’s inauguration in January.
Campos Neto mentioned that there could be more meetings in the future and said, “I listened more than I talked.” He has been in charge of the independent monetary authority since 2019, a position he was appointed to by former President Jair Bolsonaro, who was defeated by Lula in last year’s election.
“Lula pays more attention to what I say compared to Bolsonaro,” stated Campos Neto. “Bolsonaro was quicker in conversations. With him, I knew I had a short window to discuss something, and then he would lose focus.”
Campos Neto, whose term is set to end next year, also expressed appreciation for his working relationship with Fernando Haddad, the finance minister under President Lula. He mentioned, “Of course, we don’t agree on everything, but we have a strong alignment.”
