By Fabricio de Castro
SAO PAULO (Reuters) – Brazil’s current pace of interest rate cuts is “appropriate” for the moment, central bank chief Roberto Campos Neto said, after the monetary authority reduced its key lending rate by 50 basis points in its two latest meetings and signaled more of the same ahead.
In an interview with Globo TV aired on Tuesday, Campos Neto said the bank believes inflation was “going in the right direction”, justifying its decision to deliver 50-basis-point cuts per meeting.
The central bank in August reduced rates for the first time in three years after a nearly year-long hold following 1,175 basis points of hikes to curb inflation, and has vowed to act “firmly” to bring consumer prices back to target.
In mid-September, annual inflation stood at 5%, a steep deceleration from the 12.20% high seen in May of last year. The bank’s goal for 2023 is 3.25% plus or minus 1.5 percentage points, and the target will be trimmed to 3% next year.
Campos Neto has been criticized multiple times by President Luiz Inacio Lula da Silva because of high interest rates, which the leftist leader sees as hindering economic growth, but earlier this month they had their first meeting since the president’s inauguration in January.
The central bank chief said more meetings could happen going forward.
“I listened more than I talked,” said Campos Neto, who was was appointed to head the autonomous monetary authority in 2019 by former President Jair Bolsonaro, defeated by Lula in last year’s election.
“Lula spends more time paying attention to what you say than Bolsonaro used to,” Campos Neto said. “Bolsonaro was faster. I knew I had three minutes to talk to him about something, and then he would get more absent-minded.”
Campos Neto, whose term ends next year, also praised the relationship he has built with Lula’s finance minister Fernando Haddad.
“Obviously, we won’t think the same about everything, but we are very aligned,” he said.
(Reporting by Fabricio de Castro; Editing by Christina Fincher)
