Good morning! Today, we talk about the continuing feud between Lula and the Central Bank. One month after the January 8 riots — and what will happen to Jair Bolsonaro.
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Lula refuses olive branch
The Central Bank yesterday published the minutes of its latest policy meeting, commenting on its decision to keep Brazil’s internet rates at 13.75 percent. Oddly, it was a highly political document, in which the Monetary Policy Committee said “the implementation of the proposed fiscal package [by the Finance Ministry] could reduce the upside inflation risk.”
Context. Last month, Finance Minister Fernando Haddad announced his first plan to reduce the public deficit, which included a new debt refinancing program, efforts to reduce federal spending, and the fine-tuning of mechanisms capable of stemming revenue losses.
- He also promised to present a new fiscal framework to replace Brazil’s current spending cap by April.
Why it matters. The committee’s minutes were seen by economic agents as an olive branch from the monetary authority to the government.
Yes, but … After the...