Since Luiz Inácio Lula da Silva took office as president in January, he, his party, and his coalition have been bashing the Central Bank for keeping Brazil’s benchmark interest rate unchanged at 13.75 percent since August 2022.
These forces are no longer merely talking the talk, as leaders of nine political parties in the government’s coalition have formally asked the Senate to open an investigation into Central Bank head Roberto Campos Neto, who they say has “delayed” interest rate cuts.
Members of Congress assured that Senate President Rodrigo Pacheco said he would submit the request to the chamber’s legal department and summon Mr. Campos Neto to “provide explanations” for his conduct.
The grilling would take place on August 3, one day after the Central Bank’s next policy meeting. But disclosure laws prevent the nine members of the Monetary Policy Committee — Mr. Campos Neto included — from speaking publicly until the minutes of a policy decision are published, which happens the week after a meeting.
The 2021 law that gave the monetary authority the autonomy to pursue the inflation target also states that the Central Bank president must explain the monetary authority’s accomplishments (or lack thereof) to the Senate at least twice a year. Summoning Mr. Campos Neto, therefore, does not necessarily mean an investigation will be launched.
“The interest rate policy is flawed, wrong; keeping the interest rate at 13.75 percent is a mistake,” said Congresswoman Gleisi Hoffmann, who is also chair of the Workers’ Party. Other government allies have called the current rate “borderline criminal.”
Mr. Campos Neto’s summons appears to be a rather ill-timed move, as not only the market but the Central Bank itself has already signaled that it sees room to begin a cycle of cuts in the benchmark interest rate.
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