“When we look at the reaction of the market and economic agents to fiscal news, it is a concern that is at the top of the list, it is what has been responsible for making Brazil’s risk high, differentiating the country from the rest of the countries. Today, we are the most indebted country in the emerging world, ”said Campos Neto to the newspaper.
For him, the Budget is not yet closed and it is necessary to follow the negotiations to assess the influence on the Central Bank’s performance. If the Budget passes, however, he pointed out that “the perception that it is unworkable or needs to make some kind of credit supplementation to reach the numbers is a factor that will worry the BC”, since it changes the risk premium present in the macroeconomic variables.
In the interview, the BC president also pointed out his concern about the pace of progress in vaccination, since it is “what makes the economy open”. “For the BC, it is relevant to have an estimate of the opening of the economy to outline our scenario”, he pointed out.
Campos Neto also defended the most recent decision by the monetary authority to increase the basic interest rate from 2% to 2.75% per year, when asked about “a crossroads” in raising interest rates amid the retraction of economic activity.
“Our primary goal is inflation. In our language, we make it clear that this increase will not strongly influence the growth of 2022. The BC controls short interest (the Selic rate), but has a set of other variables that are not under the control of the BC, such as the long interest curve , the exchange rate and other conditions, ”he said, who stressed the importance of conducting monetary policy for more stable inflation over time. “It is important to conduct the policy with credibility. It is what maximizes, over time, the process where inflation is less volatile, more stable and low ”, he said.
He also stated that the message sent by the Central Bank is that a new 0.75 percentage point increase in the Selic rate is anticipated, “unless conditions change in an extraordinary way”. “In a context that has not been realized and with higher than expected inflation, with a contamination process, we believe that doing it faster means that we can anticipate and do less in total,” he said.
To the newspaper “O Estado de S.Paulo”, Roberto Campos Neto also denied that he had received an invitation to replace Paulo Guedes at the Ministry of Economy, as the market has already speculated a few times. “There was never an invitation. I have an agenda at BC to follow. I have a mission in BC to fulfill, ”he said, explaining that his agenda“ shares the same ideas as the economic group as a whole ”.
The defense of liberalism was also the subject of the interview, with Campos Neto reinforcing that “liberalism is the solution” and defending the reduction of the size of the State. “I believe that liberalism is the solution, because the Brazilian State is intoxicated by its size. We need to gain efficiency by decreasing its size and not increasing. There have been attempts in the past to gain efficiency by increasing it, and it has not worked. We are here to make a different attempt, liberal thinking, “he said.
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