Brazil’s Finance Minister Fernando Haddad announced on Monday the government’s new appointments to the Central Bank board of directors. The two appointees must be confirmed in a Senate hearing.
Gabriel Galípolo, currently Mr. Haddad’s number two in the finance ministry, has been appointed to head the Central Bank’s monetary policy committee (Copom). Career Central Bank worker Ailton Aquino has been named the new director of auditing.
These new appointments come at a time of tensions between the Central Bank and the government led by President Luiz Inácio Lula da Silva, as Lula has repeatedly criticized the autonomous bank and its president Roberto Campos Neto for Brazil’s high interest rates.
The Copom last week kept the Selic benchmark interest rate unchanged at 13.75 percent, a decision that had been widely expected but earned the monetary authority another round of fire from the government. Lula argues that high rates are squeezing Brazil’s stagnant economy; the Central Bank plans to keep rates high for as long as it takes to get inflation back on target.
Known to be close to Mr. Haddad, Mr. Galípolo’s appointment is reportedly seen by market analysts as part of the government’s strategy to further pressure the Central Bank to start cutting rates. The government “is seeking better coordination of fiscal and monetary policy,” Mr. Haddad said as he announced the appointments.
Some fear Mr. Galípolo would simply do the government’s bidding and erode trust in the Central Bank as an independent and competent institution — but on the flip side, his presence could help ease political tensions. Planning Minister Simone Tebet told journalists he was a “good choice” who would help “pacify this issue [of interest rates].”
Senate President Rodrigo Pacheco also reacted positively to the nomination.
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