Reuters – The Minister of Finance, Fernando Haddad, stated in an interview with the newspaper Folha de S.Paulo that it would be a huge surprise for him if interest rates rose and that it was “an extremely complex experience living with a president of the Central Bank that you didn’t choose” .
When asked about the statement by the president of the Central Bank, Roberto Campos Neto, that the less transparent fiscal anchor increases the cost of monetary policy, signaling that interest rates could rise, Haddad responded that Jair Bolsonaro’s government has broken the spending ceiling all the time. entire and, at the worst moment, during the Covid pandemic, the Selic reached 2%.
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“I’m not director of the Central Bank. But, for me, it would be a huge surprise, with inflation in March at 0.16% (interest rates rising). What are they asking of the Brazilian economy?”, stated Haddad in the interview given last Thursday and published this Saturday.
“We are eliminating absolutely ineffective tax expenditure. We have already managed to do a lot. Revenue this year is increasing 8.5% above inflation,” he added.
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In March, the Central Bank decided to make a further reduction of 0.50 percentage points in the Selic rate, reaching 10.75% per year. The next meeting of the Monetary Policy Committee (Copom) takes place on May 7th and 8th.
Haddad said he believes that interest rates will not rise in the United States and that the Federal Reserve, the US central bank, was wrong in its own forecasts.
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“A lot of people said that American interest rates would fall in March. They were betting on money. And when that happens, it’s for real, right? It’s not a chief economist’s guess. The FED messed up, it made mistakes in its own forecasts. It communicated wrongly. It led the world to make mistakes. Many people lost money, including in Brazil, betting on the appreciation of the real”, said the minister.
“I believe that interest rates will not rise (in the US). But I also believe that they will push the cutting cycle forward.”
