Brazil President Denies Speculation of Crisis With Central Bank
Brazilian President Jair Bolsonaro’s chief of staff denied speculation of a crisis building between him and Roberto Campos Neto, the country’s central bank chief, calling it an “imaginary bonfire.”
Bolsonaro expressed regret for signing a law that gave formal autonomy to the central bank, according to the Associated Press. The news agency reported it wasn’t the first occasion that the president has expressed the desire to interfere in the country’s monetary authority.
“Let’s not throw gasoline on the fire, especially gasoline that doesn’t exist in an imaginary bonfire,” Chief of Staff Ciro Nogueira said in a tweet, adding that the relationship between the government and central bank is “excellent.” “The autonomy of the monetary authority is a historic and irreversible advance.”
The central bank is aggressively raising interest rates this year to bring inflation back to target -- it has delivered a total of 325 basis points in hikes so far and promised another full percentage-point increase for next month.
The bank’s hawkish stance has yet to convince economists. Inflation expectations for 2022 keep rising as the market accounts for higher commodities and electricity costs, as well as growing political noise in the run-up to the 2022 elections.
Investors are worried about pressure for more public spending as well as friction between Bolsonaro and the top court. Tensions spiked after he asked the senate to impeach a justice who’s targeting him and his allies for alleged attacks against democracy. Bolsonaro filed a petition with the senate late Friday requesting the removal of Supreme Court Justice Alexandre de Moraes, saying his acts “go beyond acceptable republican limits.”
Moraes has authorized several criminal probes of Bolsonaro, including into his efforts to undermine Brazil’s electronic voting system. The president denies any wrongdoing. Earlier Friday, the justice targeted several of the president’s more outspoken allies for allegedly inciting violent protests against the top court and congress ahead of Sept. 7 Independence Day celebrations.
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