Political Risk Latin America Blog @PolRiskLatam

Brazilian central bank chief steps down from president-elect Rousseff’s team

Posted in News and Articles, Political Risk by politicalrisklatam on November 19, 2010

by Merco Press News, November 19th, 2010.

Brazilian central bank president Henrique Meirelles will not accept any invitation to remain as head of the bank unless president-elect Dilma Rousseff gives him full guarantees of “absolute autonomy” in running the institution. He also rejects the idea of holding on the job during the first quarter of 2011 until a definitive successor is named.

Meirelles believes that yielding autonomy, (and there are there are strong indications that the incoming president plans to lower interest rates faster and have them two percentage points above inflation by 2014), because it would compromise his career and credibility conquered during the eight years as head of the bank with outgoing President Lula da Silva.

According to the influential O Estado de Sao Paulo the most probable exit to the situation is for Mireilles to step down and be replaced by a banker closer to the line of thinking of Ms Rousseff and Finance minister Guido Mantega who has been confirmed at his post.

Ms Rousseff considers that Meirelles role was very important in implementing President Lula da Silva administration policy to combat inflation, and was also very effective when he applied contention measures to address the 2008/2009 global crisis, forcing Brazilian banks to inject 100 billion Real into the economy to ensure liquidity and credit both for corporations and individuals.

But “Dilma wants to centralize all economic actions at the beginning of her government”. She argues that the central bank together with the Finance ministry and the Planning Office should find “other ways to combat inflation, currently virtually restricted to raising interest rates”. (continue reading… )

 

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