(Bloomberg) — Brazilian President Luiz Inacio Lula da Silva named three new members of the country’s central bank on Friday as he pressures investors to raise interest rates further to cool the economy and reduce inflation.
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The leftist leader of the government named Nilton David, the chief trader at the treasury department of Banco Bradesco SA, as director of monetary policy, according to a statement from the central bank. Gilneu Vivan was appointed as director of legal affairs and Izabela Correa as director of institutional relations. Vivan and Correa are central bank employees.
The Brazilian Senate must confirm all its nominees.
The Central Bank of the country is facing a major problem of inflation after the government’s plan to reduce public spending has crippled companies. Inflation forecasts are running well above the 3% target through 2027 due to factors including strong demand, low-employment and the effects of a severe drought earlier this year. The agency’s incoming governor Gabriel Galipolo said Thursday that Brazil may need long-term debt financing.
The central bank has been the center of criticism from Lula, who has repeatedly criticized the agency’s head, Roberto Campos Neto, for disrupting the economy with high inflation. As recently as Wednesday, the leftist leader said there was no “explanation” for the current level of debt.
Investors rushed to dump Brazilian assets amid concerns about the country’s public spending and growing debt. The benchmark stock exchange is trailing most of the world’s gauges, while the real one has weakened to a new record, adding to the biggest loss among any major currency this year.
Traders are raising prices amid jumbo uncertainty, a 1 percent hike in the bank’s December rate, and an end-of-cycle Selic near 15% next year. Policymakers recently raised lending rates by a half-point to 11.25% in November.
(Editors have background on the selections in the second paragraph.)
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