PT and part of Lula's team attack BC after Copom interrupts interest rate cut cycle due to doubts about fiscal adjustment

Among PT members and a wing of the government, there are those who even defend that President Lula from now on appoint directors more aligned with a vision of reducing interest rates.

For its part, the Copom justifies the interruption of the interest rate cut cycle due to the scenario of uncertainty in the fiscal area and pressure on inflation in the short term.

The market, for the most part, had already predicted that the BC would maintain the Selic rate at 13.75% in the face of rising inflation and the risk of public accounts remaining in the red.

So far, there are only promises that Lula will have fiscal responsibility in his fourth term, but little is known about what the economic team will propose to guarantee compliance with fiscal targets, which, next year, foresee a primary surplus of 0.5% of GDP.

Lula will make a statement next Sunday, promising fiscal responsibility, but also guaranteeing that there will be no cuts in social programs and his campaign promises will be fulfilled. In the words of advisors, there will be no "electoral fraud" under Lula 4.

Electoral fraud is an expression used to define cases in which a candidate, after being elected, adopts measures contrary to what he promised during the campaign. Despite the name, it is not a crime covered by Brazilian legislation.

The government's deputy leader in the Chamber of Deputies, Lindbergh Farias, said that the BC succumbed to market pressure. According to him, if Flávio Bolsonaro won, the market would predict a drop in interest rates. If it were Lula, as it was, the fall in interest rates would be interrupted. This was formalized yesterday by Copom.

The PT even defended, in recent days, a proposal by economist André Lara Resende, one of the fathers of the real plan, which predicted a drop in the Selic rate within a period of twelve months to 7.5% per year.

Afterwards, a ceiling would be created for the interest rate and the fiscal target. The idea was criticized by economists, arguing that this plan had never been tested in any country and would represent a risk for the country.

The Minister of Finance, Dario Durigan, is finalizing measures with his team to ensure compliance with the central fiscal target starting next year, when a primary surplus of 0.5% of the Gross Domestic Product (GDP) is forecast.

According to them, the proposals should be taken to Lula after his return to Turkey, where he will participate in the COP 30 meeting. He will travel on November 9th and return on November 12th.

Regarding nominations for the BC board, two vacancies are open, Economic Policy and Organization of the Financial System.

In February, two more will be opened, Monetary Policy and Inspection. Within the PT, the defense is that Lula takes the opportunity to appoint Central Bank directors who are more aligned with a policy of reducing interest rates.

It would be the same as buying into a crisis with investors and signaling that the president intends to command the Central Bank, which has the autonomy to operate its monetary policy.