Copom faces problems by not indicating a drop in interest rates, assesses Haddad
“We are contracting a problem with this interest rate. That’s what this decision means. It is contracting future inflation and an increase in the future tax burden. That’s what is being hired,” said Haddad in Paris, where he is accompanying President Luiz Inácio Lula da Silva in official trip.
In the statement, the Copom indicated that there are still risks to inflation, such as possible global pressures on prices and “residual” uncertainties about the vote on the fiscal framework. Unlike the last meetings, the phrase that stated that the Central Bank could raise interest rates again if inflation rose, was removed, but the monetary authority did not say whether or when it intends to cut the Selic rate.
For Haddad, the Copom could inform or at least indicate when it will begin to reduce interest rates. According to the minister, there is a mismatch between the Central Bank’s assessment and the economic data that point to a sharp deceleration in inflation, which worries the Ministry of Finance.
“The communiqué, as usual, is the fourth very bad communique. All were bad. And sometimes he corrects it in the minutes (disclosed six days after the Copom meeting), but it does not alleviate the situation. There is a mismatch between what is happening with the dollar, with the yield curve, with economic activity. It is a clear sign that we could signal a cut in the Selic Rate”, continued to criticize Haddad.
Focus Bulletin
The minister also asked the Central Bank to take less into account the Focus bulletin, a weekly survey of financial institutions carried out by the body, when making decisions. “Research cannot replace monetary authority. There is a survey that has been wrong for six months, it may even continue to be taken into account, but the arguments have to be weighed,” said the minister.
In the last edition of the survey, market analysts believed that the Selic would start to fall in august.
Public Accounts
Earlier in the week, Haddad had stated that the Central Bank should have cut interest rates as of March. The BC’s persistence in not reducing the Selic, highlighted the minister, will also impact public accounts because the Union, states and municipalities lose revenue with weakened economic activity.
“States are losing income. Municipalities are losing income. The Union is not performing”, declared Haddad. The minister, however, pointed out that some gaps in the government’s cash are being resolved. He cited the forecast of voting on the bill that reformulates the voting system of the Administrative Council of Tax Appeals (Carf), administrative court of the Federal Revenue Service, which could reinforce the collection by BRL 30 billion per year with the return of the tie-breaking vote in favor of the government.
positive data
Last Monday (19), Haddad and the president of the Central Bank, Roberto Campos Neto, had lunch outside the official agenda at a restaurant in Brasilia. The minister said he was making “a genuine effort” to understand what is going on at the Central Bank from a technical point of view.
“I’m speaking as a Brazilian, I’m not speaking here in any other way. I can not understand. With everything that happened this month (decline in inflation)? I’m not going to hypothesize about people’s subjectivity. What I say is the following: technically speaking, I cannot understand this statement (from the Copom)”, criticized Haddad. The minister reiterated that he will meet Campos Neto again next week, at the National Monetary Council (CMN) meeting that will set the inflation target for 2026 and, in theory, may revise the targets for 2023, 2024 and 2025.
In addition to the sharp deceleration of inflation, the minister mentioned, as positive data for the economy in June, the Improved agency perspective Standard & Poor’s (S&P) risk rating system and advances in negotiations for voting on the new fiscal framework and tax reform.
Foto de © Valter Campanato/Agência Brasil
Economia,Fernando Haddad,Copom,juros,Selic
