What to expect from Roberto Campos Neto as head of Brazil’s Central Bank

Today, economist Roberto Campos Neto will take over the reins of Brazil’s Central Bank. He will have big shoes to fill, replacing Ilan Goldfajn, a darling of the markets who is credited with taming inflation amid Brazil’s worst recession on record. Mr. Goldfajn oversaw the lowering of the Selic benchmark interest rate to its lowest point in history—and brought credibility back to the bank.

Mr. Campos Neto knows his predecessor set the bar high. He himself has deemed the Central Bank’s moves since 2016—when Mr. Goldfajn took over—as “excellent.” But he also pointed out that, even though much has been done, Brazil still needs to modernize its financial system and the state structure. One key measure would be passing a law to make the monetary authority formally independent from government interference—which hasn’t always been the case.

“Bureaucratic costs created by excessive state intervention were diluted in comparison to the high monetary policy rates. Now, with the Selic benchmark rates at its lowest level ever, we have the opportunity to see these imperfections and propose alternatives that improve the efficiency of our markets,” Mr. Campos Neto stated during his Senate confirmation hearing.

Libertarianism begins at home

Mr. Campos Neto’s reign will focus on two pillars: continuity and a heavy dose of liberalism. The latter he learned from his grandfather, Roberto Campos—one of the most notorious defenders of libertarian economics in Brazil. The late Mr. Campos used to say: “The good the state...