SAO PAULO (Reuters) – Brazilian Finance Minister Fernando Haddad said on Friday that a change in the timeline for meeting the inflation target will be discussed with President Luiz Inacio Lula da Silva, countering the current calendar-year target model, which he deemed unnecessarily restrictive.
Speaking on the sidelines of a seminar hosted by the central bank, Haddad also mentioned his intention to engage in dialogue on the matter with Planning Minister Simone Tebet, emphasizing that such a change would require a presidential decree.
“The decree doesn’t come from me, it is a presidential decree. Therefore I must present it to the president for his consideration, and I would not do it without consulting Minister Simone and the president,” he said.
Haddad favors “a continuous inflation target” and has frequently criticized the calendar-year model, while Lula has advocated for higher inflation targets and a less stringent monetary policy.
In contrast, the central bank has cautioned that these discussions may have elevated inflation expectations, helping to impose the retention of interest rates at a cycle-high level of 13.75% to consolidate disinflation.
Haddad said that debating monetary policy does not mean going against the central bank, and said his ministry and the monetary authority have been looking to maintain a constant, “as cordial as possible” dialogue as they try to harmonize monetary and fiscal policies.
Haddad highlighted that this was the first time a Brazilian government had to face a transition without appointing its own central bank head, which has been requiring some calibration.
Congress passed a law during the Jair Bolsonaro administration to make the central bank autonomous, with current chief Roberto Campos Neto – a Bolsonaro appointee – set to remain in office until next year.
(Reporting by Gabriel Araujo and Fabricio de Castro; editing by Jonathan Oatis and Leslie Adler)