Brazil's top court upholds central bank autonomy amid rising inflation
Reuters
Published Aug 26, 2021 04:18PM ET
BRASILIA (Reuters) - Brazil's Supreme Court on Thursday ruled that a law granting the central bank autonomy was constitutional, guaranteeing monetary policymakers a freer rein to tackle rising inflation after leftist opposition parties sought to strike down the measure.
The 8-2 ruling is a boost for the credibility of monetary policy under President Jair Bolsonaro. Brazil's central bank has hiked interest rates aggressively to tame surging inflation amid an uneven economic recovery from the world's second-deadliest coronavirus outbreak.
The law does not change how the bank sets interest rates, but distances it from politics by setting fixed four-year terms for its governor and directors that will no longer coincide with the presidential election cycle.
Bolsonaro has reportedly regretted enacting the law as sharp rate hikes threaten to hurt the economy next year, when he runs for re-election. The bank's policymakers have also made indirect criticism of his efforts to raise public spending to win votes.
Central bank sources told Reuters they were aware the president was unhappy with the law but said the bank had not faced any pressure from the president on policy autonomy.
Bolsonaro's office said he favors central bank autonomy.
The monetary authority has already had de facto autonomy to implement policies deemed necessary to achieve its inflation-targeting goals, but the bank president has technically been a member of the Cabinet appointed by Brazil's president.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.