Brazil’s Bolsonaro reportedly irked by central bank autonomy
BRASILIA, Brazil — Brazil’s President Jair Bolsonaro has begun expressing irritation at the central bank’s newfound autonomy as surging inflation presents a threat to his 2022 re-election prospects, government officials say.
On Thursday, during a flight home from Mato Grosso state, Bolsonaro said he regretted signing the bill into law this year that granted the bank autonomy, a high-level official aboard told the AP. Separately, Bolsonaro on several recent occasions has expressed discomfort with the autonomy and said that he would like to interfere in monetary policy, a minister told the AP. Both spoke on condition of anonymity because they weren’t authorized to speak publicly.
The law passed in February sought to protect the bank from political meddling and burnish Brazil’s economic credibility among investors. Under the law’s terms, the president still nominates the central bank chief, but cannot fire him for disagreements about monetary policy.
Bolsonaro in 2018 provided assurances that he would remain hands-off economic policymaking, and the market celebrated his pick to lead the central bank: economist and former trader Roberto Campos Neto, who began a fixed four-year term in April.
Bank autonomy is among few significant economic reforms that Bolsonaro’s administration has managed to secure. Others have faced headwinds, including lately a tax reform proposal, at the same time as the government signals it might boost spending next year despite limited fiscal space.
That has prompted a selloff due to concerns about Brazil’s fiscal policy outlook, as well as speculation the market could give up hope on the Bolsonaro administration’s will or ability to deliver further reforms.
Twelve-month inflation is tracking at almost 9%, its fastest pace in over five years. After the government drew down pandemic welfare disbursements, the poor have been especially hard hit by double-digit increases in the prices of foodstuffs, cooking gas and electricity.
Economists surveyed by the monetary authority have raised their median 2021 inflation forecast for 19 straight weeks, to 7.05%.