Central Banks
Lula’s Jab at Central Bank Puts Traders on Edge Across Brazil
- Attack on central bank’s autonomy is relevant risk, Vista says
- Lula’s criticism of inflation goal added to investor worries
Brazil's central bank headquarters in Brasilia.
Photographer: Andressa Anholete/BloombergThis article is for subscribers only.
Shielding the central bank from political meddling in Brazil was no small feat. It took decades of cajoling and lobbying by the financial community to make it the law in 2021.
So when President Luiz Inacio Lula da Silva, just three weeks into office, questioned the need for an autonomous central bank during a national TV interview last week, it didn’t go over well in markets. Swap rates surged and the currency tanked following his remarks. Cabinet members entered the field and managed to halt the plunge that day, but the episode left many investors increasingly alarmed about a Lula presidency they are finding to be vastly different than the one that oversaw an economic boom back in the aughts.