The Central Bank (CB) should start next year with two fewer directors. In fact, the directors Renato Dias de Brito Gomes, of the Financial System Organization, and Diogo Abry Guillen, of economic policy, will leave their positions on December 31.
So far, President Luiz Inácio Lula da Silva (PT) has made no mention of the next candidates to form the board of directors of the monetary authority and the Monetary Policy Committee (Copom).
The financial market expects that the names indicated by Lula will be more aligned with the interests of the government, as happened with the president’s appointments.
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Even if Lula decides to proceed with the appointments in the coming days, the names still need to be approved by the Economic Affairs Commission (CAE) of the Federal Senate, which may not happen due to the recent crisis between the executive and legislative branches around the appointment of the Attorney General of the Union, Jorge Messias, as Minister of the Supreme Federal Court (STF).
Last Wednesday (12/03), the President of the Senate, Davi Alcolumbre (União Brasil – AP) decided to cancel the schedule planned for Messias’ hearing in the Legislative Chamber under the pretext that Lula was delaying sending the formal message to the Senate with the aim of guaranteeing more time to the lawyer, with the aim of obtaining more support in the vote.
The Palácio do Planalto denies this accusation. Despite this, Alcolumbre said he should only resume Messias’ schedule after the approval of the Budget, consisting of the Budget Orientation Law (LDO) and the Annual Finance Law Project (PLOA).
The tension between the powers makes it difficult to create a space to learn about and discuss BC candidates. In addition, the National Congress goes on vacation on December 22 and legislative work is paralyzed.
If Lula names two names in the coming days and Alcolumbre establishes a timetable for evaluating potential administrators, there will not be enough time to carry out the famous “kiss of hands”, in which the candidates go to the offices of parliamentarians to defend their interests and guarantee the necessary votes.
The president of the BC, Gabriel Galípolo, estimated that we must wait for the moment when Lula deems it appropriate to make the appointments.
“It is the prerogative of the President of the Republic, as you can imagine, the president has other subjects on his table than this subject,” he declared.
The Board of Directors of the Central Bank will be entirely composed of Lula’s candidates
Of the 9 directors of BC, 7 were appointed by Lula during his mandate. The two positions that will remain vacant on the bank’s board of directors come from names proposed by former President Jair Bolsonaro (PL).
The BC Home Rule Act provides a fixed term of four years for all board members.
Discover the British Columbia members appointed by Lula:
- Gabriel Galípolo – president of the Central Bank;
- Ailton Aquino – Director of Inspection;
- Gilneu Vivan – director of Regulation;
- Izabela Moreira Correa – Director of Citizenship and Driving Monitoring;
- Nilton David – director of monetary policy;
- Paulo Picchetti – director of international affairs and enterprise risk management;
- Rodrigo Alves Teixeira – Director of Administration.
Members of Copom and President of British Columbia, Gabriel Galípolo
It is expected that with a BC composed entirely of Lula candidates, perhaps of more moderate tendencies, called “Dovish» in economic jargon, to describe more flexible and expansionary positions in relation to the base interest rate and inflation, with the aim of promoting economic growth and employment.
Currently, the Selic interest rate is 15% per year, a level considered very restrictive by members of the government.
In its communication, the BC believes that it does not see a near horizon for the start of monetary easing and considers that the current interest rate should remain the same for a “fairly prolonged period”.
Despite this, economists and members of the economic team have put pressure on Copom to reduce the current rate, because inflation, measured by the National Institute of Geography and Statistics (IBGE), has converged again towards the target, set at 3% per year, with a tolerance band of 1.5% more or less.
Understand what Copom is
- The Monetary Policy Committee is the body of the Central Bank responsible for defining the basic interest rate of the economy, the Selic;
- The group uses Selic to control inflation, when it rises too much, interest rates rise; when it is low, it is possible to reduce it;
- The Copom is formed by the president of the Central Bank and the directors of the institution, specialized in areas such as economic policy and regulation;
- The board of directors meets every 45 days to analyze economic data, such as inflation, exchange rate, activity and international scenario, before voting on the rate;
Questioned, the Minister of Finance, Fernando Haddad, estimated that if he had been director of the Central Bank, he would have already voted to lower interest rates.
So far, all Copom decisions have been unanimous in favor of maintaining Selic, which may be modified at the next meeting, which will take place on December 10 and 11.
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