The Minister of Finance, Fernando Haddad, sent a direct message to the Central Bank this Wednesday, 27th, during his participation in the Brazil-France Economic Forum, in São Paulo. “I ask that the Central Bank not be scared”, said the minister in reference to data released by the Ministry of Labor this Wednesday, 27th. Brazil opened 306 thousand formal vacancies, above the expectation of 245 thousand jobs.
Haddad’s speech to the directors of the Central Bank relates to the conduct of the basic interest rate, the Selic, which is 10.75% per year. In the minutes of the last Copom meeting, which cut the rate by half a percentage point, the monetary authority changed its communication, giving a more ‘hawkish’ tone, and stating that part of the collegiate is considering making smaller cuts from the June meeting onwards. The BC’s argument is that there is uncertainty about the inflationary scenario. The warming of the job market, with income growth, increases demand and puts pressure on prices, especially for services.
The conduct of monetary policy was the target of many clashes — and attacks — from the Lula government to the Central Bank last year until the beginning of Selic cuts.
When talking about the BC, Haddad also highlighted the growth of the Brazilian Gross Domestic Product (GDP) and pointed out that national inflation has regressed while GDP growth remains robust. “There is no reason for apprehension. An economy can grow with low inflation,” he said.
