Paulo Picchetti told Bloomberg that the speech by the Central Bank President was made at an “event” and supports “official communication mechanisms.
“The Director of International Affairs and Corporate Risk Management at the Central Bank (BC), Paulo Picchetti, stated that statements by the head of the monetary authority, Roberto Campos Neto, regarding the deceleration of the basic interest rate, Selic, made during an “event” had not been fully discussed among the members of the Monetary Policy Committee (Copom).
In an interview with Bloomberg released on Tuesday (May 14, 2024), Picchetti argued that it is necessary to prioritize “official communication mechanisms” that are the “result of conversations among council members.”
“The communication by the president [Campos Neto] took place at an event and, honestly, I don’t know if he had the intention and purpose of turning this into guidance, but it ended up being the case,” he said.Read the excerpt from the interview with Bloomberg below.
During a meeting with investors organized by XP on April 17 in Washington (United States), the BC chief responded that “between changing the guidance and moving to a scenario of reduction or uncertainty, it is necessary to assess the impact of the reduction or increase in uncertainty,” when asked about what the decision would be at the next committee meeting.”
There could be a reduction in uncertainty, which means we would follow the usual path. We could have a system where uncertainty remains very high and does not change significantly, which may mean a reduction in pace,” he said at another moment.
In the same month, Campos Neto indicated that there had been a worsening of the economic situation. At the time, the economist said there were more uncertainties now than at the last Copom meeting.
Picchetti, who was alongside Campos Neto at the event in the US, however, did not specify which statement by the head of the BC he was referring to or at which event it was made.
The Director of International Affairs and Corporate Risk Management denied that the divergence is political. “There was a big exaggeration in attributing very simplistic views to the decisions on one side and the other,” he said.
Picchetti stated that the BC is “100% committed” to bringing inflation back to the target center of 3%.The economist was one of the 4 directors who voted for a 0.5 percentage point cut in the Selic on Wednesday (May 8).
The monetary authority decided to reduce the base rate by 0.25 percentage points, from 10.75% to 10.5%.
According to the Copom minutes, the Central Bank discussed the possible reputational cost of the monetary authority adopting a cut that had not been formally communicated.
Campos Neto and 4 other directors who were not appointed by the government of Luiz Inácio Lula da Silva (PT) argued that, in reality, there would be a “risk of loss of credibility in the commitment to fighting inflation and anchoring expectations,” given the change in circumstances.”Even with a 0.5 percentage point cut, we would still have a restrictive rate,” Picchetti said.Read also:
