Lula won’t name new Central Bank directors this week

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Finance Minister Fernando Haddad told reporters in Brasília that President Luiz Inácio Lula da Silva will not name two new members of the Central Bank board this week.

Tuesday marks the end of the terms of Paulo Souza, the supervision director, and Bruno Serra, the monetary policy director. Both can stay put until their replacements are named and confirmed by the Senate.

Lula’s pick to replace them will either calm markets down or aggravate their jitters about the government. The nomination for monetary policy director in particular will be closely watched, as the position also comes with a seat on the Monetary Policy Committee — which sets Brazil’s benchmark interest rate (currently at 13.75 percent).

A law enacted in 2021 established that the Central Bank’s board members are named for four-year terms that do not coincide with presidential terms — with the aim of avoiding monetary policy swings every time there is a change in government.

In recent weeks, Lula and his allies have consistently bashed the monetary policy adopted by the Central Bank. Workers’ Party chair Gleisi Hoffmann went as far as saying that central banker Roberto Campos Neto is “acting against Brazil.”

Amid these criticisms, Mr. Campos Neto has extended an olive branch to the government — with the Monetary Policy Committee saying in the minutes of its latest policy meeting that “the implementation of the proposed fiscal package [by the Finance Ministry] could reduce the upside inflation risk.”

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