In a significant setback for President Luiz Inácio Lula da Silva, Brazil’s Central Bank has asserted its independence by raising the Selic rate to 10.75% per year, despite pressure to lower rates. The decision by the Monetary Policy Committee reflects the bank’s commitment to controlling inflation, even in the face of political criticisms.
The current Central Bank president, Roberto Campos Neto, appointed by former President Jair Bolsonaro, has resisted calls for lower rates. Lula’s nominee for the next presidency, Gabriel Galípolo, also supports this stance, signaling unity in maintaining autonomy.
Despite Lula’s attempts to influence policy, the bank’s hawkish tone and mention of a possible rate hike in November underline its dedication to curbing inflation. This move reaffirms the institution’s independence and sends a strong message about its commitment to its mandate, despite Lula’s economic challenges.
Overall, the Central Bank’s independence serves as a barrier to Lula’s influence, highlighting the complexities he faces in implementing his economic agenda and aligning monetary policy with his preferences.