In today’s issue: A new boss for Brazil’s Central Bank. Government tries to reorganize support base in Congress. Bolsonaro not so popular at kick-off.
A new boss for Brazil’s Central Bank
The Senate approved the nomination of economist Roberto Campos Neto—President Jair Bolsonaro’s pick to lead the Central Bank. During his confirmation session, Mr. Campos praised the legacy of Ilan Goldfajn, whom he will replace, and defended laws to ensure the independence of the monetary policy institution, as a way of reducing the perception of risk around the Brazilian economy. He also called for a trimmed-down version of the government.
A former director at Santander, Mr. Campos Neto defended that Brazil’s banking system is competitive, despite the fact that only 5 banks control 82% of the market. He said there’s a misperception around Brazilian banks, as people only look at their profits rather than their profitability. However, Brazil’s banks have had much higher return on equity results than U.S. banks every year since 2005—with 2014 being the sole exception.
This market concentration explains why Brazil has one of the world’s top 5 real interest rates (after inflation), even if the benchmark interest rate has been at its lowest level (6.5% per year). For some...