Lula Defends Brazil’s Central Bank Interest Rates Policy

    In a speech at Petrobras regional headquarters in the Greater ABC region of São
    Paulo, Brazilian President Luiz Inácio Lula da Silva commented last week’s
    decision by Central Bank’s Monetary Policy Committee (Copom) to raise the
    government’s benchmark interest rate (Selic) by 0.25%.

    Lula observed that inflation “gets out of control,” if the government does not have a good economic policy to keep it stable.


    “It is not the government that controls [inflation]. The prices of certain products go up, because some businessmen want to make more money,” he affirmed.

    The President availed himself of the opportunity to respond to criticisms of the interest rate hike.


    “They picked a trifle to criticize. But who remembered that on Friday we obtained Senate approval for a project that assures all pensioners loans at low monthly interest rates? Before this law, the poor guy couldn’t even enter the bank. For society this is very important,” he argued.

    Last Wednesday the Copom decided to raise the annualized benchmark interest rate to 16.25%, after five months of holding it steady at 16%.


    The decision was based on the committee’s assessment of the prospects for the trend in inflation.


    According to the Copom, the decision represents the start of a process to introduce moderate adjustments in the benchmark interest rate, so that the trend in inflation does not adversely affect the recovery of real income, thus preserving sustained economic growth.

    President Lula also used the speech to celebrate the positive numbers registered by the Brazilian economy in recent weeks, and he said that now the country will begin to “reap the fruits of what was sowed.”

    He criticized the increase in oil prices, which, in the President’s view, favors the interests of the rich countries.


    “There is pressure around the globe for oil prices to rise. This doesn’t harm the United States, Japan, and the wealthier exporting countries. It hurts the poor countries of Latin America and Africa. We need more humanism in our daily lives. We need to be more solidary with the rest of the world,” he contended.

    Agência Brasil

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