The statement from the Monetary Policy Committee (Copom) of the Central Bank (BC) is “very worrying”, said the Minister of Finance, Fernando Haddad, on Wednesday night (22). He commented on the BC’s decision to maintain the Selic rate, the economy’s basic interest rate, at 13.75% per year and the tone of the statement. When announcing the maintenance of the tava, the Copom pointed to the possibility of further hikes in interest rates, if necessary.
“At a time when the economy is retracting, the Copom even signals an increase in interest rates. We read it very carefully, but we think that the communiqué really worries a lot”, declared Haddad upon leaving the Ministry of Finance.
The minister said he was surprised by the Central Bank statement, precisely on a day when the government released new estimates which point to an increase in revenues and a reduction in the primary deficit in relation to the amount sanctioned in the Budget.
For Haddad, the release of the report demonstrates the government’s commitment to rebalancing the public accounts. According to him, this would be a reason for the Central Bank to start easing monetary policy, instead of hardening the tone in the communiqué.
“I considered the statement worrying, very worrying, because today we released a bimonthly report showing that our projections for January are being confirmed on the public accounts”, commented Haddad.
The minister said that he will review the findings on the tone of the Copom communiqué in the next institutional meetings with BC president Roberto Campos Neto. Despite the disagreements with the monetary authority, Haddad said that the relationship between the Ministry of Finance and the BC must be harmonious and that it will continue to be guided by institutionality.
“I spoke in harmony from the first interview and I will continue to persevere with that objective. I never disrespected a director or president of the Central Bank,” said Haddad. “We have an institutional relationship [com o Banco Central]. We are state bodies. We have satisfaction to give to the population. The BC has a mandate. The law is clear about the objectives of the BC”, he added.
In Haddad’s assessment, high interest rates are holding back credit. The minister reiterated that the portfolio will send, in April, measures to encourage the granting of loans. “We should send a set of measures to the Civil House in April to improve the credit environment,” he declared.
In a statement, the Copom informed that the international environment had deteriorated since the last meeting of the body, with banks in trouble in the United States and Europe and with inflation in most countries not giving in. In the domestic economy, the slowdown continues, with inflation above the target ceiling. The text mentions uncertainties in relation to the future fiscal framework being elaborated by the government, but praises the recent partial reencumbrance of gasoline and ethanol.
“On the one hand, the recent increase in fuel costs has reduced the uncertainty of short-term fiscal results. On the other hand, the conjuncture, marked by high volatility in the financial markets and inflation expectations that are unanchored in relation to the targets in longer horizons, demands greater attention in the conduction of the monetary policy”, highlighted the communiqué.
“The committee emphasizes that future monetary policy steps can be adjusted and will not hesitate to resume the adjustment cycle if the disinflation process does not go as expected”, ended the text.
According to Haddad, Brazil is in a different situation from the main international economies, which does not justify an increase in the Selic rate at this moment, even with the Federal Reserve (FED, US Central Bank) having raised basic interest rates by 0.25 percentage points this Wednesday (23).