Lula Criticizes Central Bank Policies, Pledges Market-Resistant Appointee

Brazil's President Luiz Inacio Lula da Silva criticized the central bank under Roberto Campos Neto for harming the economy and lacking autonomy. Lula plans to appoint a successor unaffected by market pressures to ensure inflation control and growth-focused monetary policies.

Brazilian President Luiz Inacio Lula da Silva criticized the central bank on Tuesday saying its chief, Roberto Campos Neto, was harming Latin America's largest economy, while signaling he will appoint a substitute who is not swayed by market jitters.

"The central bank president shows no capacity for autonomy, has a political side and, in my opinion, works much more to harm the country than to help it," Lula said in an interview with local radio station CBN. The leftist leader, who's in his third non-consecutive term as Brazil's President, argued that the central bank's behavior is the only "thing out of place" in Brazil at the moment and the interest rate cannot be "prohibitive" for productive sectors.

The central bank in its meetings on Tuesday and Wednesday is widely expected to pause its easing cycle amid increased volatility in domestic financial markets and unanchored inflation expectations. Policymakers cut the benchmark Selic interest rate in May by 25 basis points to 10.50%, following six cuts of twice that size since August last year.

Campos Neto, appointed to lead the monetary authority in 2019 by the government of then-president Jair Bolsonaro, has been the target of Lula's criticism since he came to power last year. Campos Neto's term ends at the end of this year. Lula said he plans to appoint to the position "a mature, experienced, responsible person who respects the position they hold and does not give in to market pressure," adding that Brazil's need to control inflation and its commitment to growth will be key in deciding monetary policy.

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