2023-07-04 19:20:41
© Reuters. Central Bank headquarters, in Brasília 02/14/2023 REUTERS/Adriano Machado
By Luana Maria Benedito
(Reuters) – Economist Gabriel Galípolo, former No. 2 at the Ministry of Finance, was approved this Tuesday by a Senate committee to take over the Monetary Policy directorate of the Central Bank, after a sabbath in which he defended that the measures taken by the team economy generated the prospect of monetary easing “soon”.
BC Ailton de Aquino’s career server, appointed to head the autarchy’s Inspection board, was also approved by the Economic Affairs Commission (CAE). The two names still need to be appreciated by the full Senate.
“The measures implemented so far produced in the first half the appreciation of our currency, forecasts of a smaller primary deficit, approval of a new fiscal rule, higher growth projections, lower inflation and the market is already projecting lower interest rates and cuts on the future interest rate,” Galípolo told the senators.
The former executive secretary of the Ministry of Finance also stated that since the beginning of the Luiz Inácio Lula da Silva government, the economic team has decided to take the “harder path” of harmonizing fiscal and monetary policy.
The Monetary Policy Board is responsible for ensuring the achievement of the Selic rate target set by the Monetary Policy Committee, and also commands the BC’s exchange operations and the management of international reserves.
Aquino, who will be responsible for supervising the national financial system, said he was optimistic about the future of the Brazilian economy and criticized the Central Bank’s communication, adding that he would defend improvements on this front if approved.
In recent days, the Central Bank has been criticized by members of the government for having released a first statement on its most recent decision to maintain the basic interest rate at 13.75%, interpreted as tougher, and then for having softened the tone in the minutes of the meeting, which more clearly indicated the possibility of cutting the Selic rate in August.
Galípolo received 23 votes for its approval in the CAE and two against. Aquino’s approval was 24 to 1.
WILL OF THE URNS
Asked about his vision regarding the autonomy of the Central Bank, Galípolo said that it is necessary to separate what is the technical role of an autonomous BC from what is an affront to a democratically elected government, and stressed that it is the elected power that determines the ” economic destiny” of the country.
“The Central Bank’s autonomy is often understood as if it were an autonomy of the democratic process, or as if someone wanted to be appointed to the Central Bank’s board of directors to do something in spite of what came out of the democratic will,” he said.
“It is necessary to understand that it is obvious that it is the democratically elected power, the will of the polls, that determines the economic destiny of our society… technical and operational autonomy is what the directors (of the BC) must pursue” , he completed.
Under questioning by several senators, Galípolo said in response to a question on the Saturday that the controversial project to create a common currency among Mercosur members is not intended to replace national currencies, but to facilitate relations between commercial partners.
“Almost always the criticisms that come to the text come from a mistaken denomination and a misunderstanding… the idea that it was a single currency — what would it resemble, for example, –, that it is something that was made to replace national currencies”, said Galípolo.
“The idea is not of a currency to replace national currencies, but of a unit of account and a means of payment that allows viability and can facilitate the relationship between these countries.”
Last year, Galípolo and the current Minister of Finance, Fernando Haddad, defended in an article the creation of a common currency for Latin America, which was the target of criticism from more orthodox economists and participants in the financial market.
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