BRASILIA President Luiz Inacio Lula da Silva's first picks for key positions in Brazil's central bank, Gabriel Galipolo and Ailton de Aquino, defended the government's actions and their positive impact on forecasts and market prices during a Senate hearing on Tuesday.
Speaking at the Economic Affairs Committee, Galipolo - the former executive secretary of the Finance Ministry - asserted that measures implemented by the economic team have generated the prospect of imminent monetary easing.
"The market is already anticipating lower interest rates and future rate cuts," he said.
Addressing the issue of foreign reserves, whose management would fall under his responsibility in the new role, Galipolo highlighted Brazil's advantage compared to neighboring countries facing potential balance of payments crises.
Brazil currently holds over $340 billion in foreign reserves, which have provided a "much greater" degree of economic policy freedom, serving as a "significant buffer against external shocks."
Regarding prospects for a common currency, which has previously drawn criticism from the central bank chief, Galipolo argued that the proposal would not aim to replace national currencies but rather establish a unit of account to facilitate trade relationships between countries.
Aquino, a central bank official nominated by Lula for the position of supervising director, emphasized that improved projections by private economists for economic growth and inflation demonstrate the agents' confidence in the current government's economic management.
After voting in the commission, Galipolo and Aquino will need to receive the endorsement of the full Senate.
Central bank chief Roberto Campos Neto, picked by former President Jair Bolsonaro, will complete his term in December 2024 as per an autonomy law passed in 2021.
Lula, who has criticized the bank for long holding its interest rate at a cycle high of 13.75%, will eventually replace all nine members of the bank's board, which decides monetary policy.
(Reporting by Marcela Ayres; Editing by Mark Porter)
