President of the Central Bank says at a seminar that economists point to a structural GDP growth rate of 1.5% per year
The president of BC (Central Bank), Roberto Campos Neto, said at the institution’s seminar in São Paulo this Friday (May 19, 2023) that greater economic growth requires reforms.
He did not specify the reforms or the country he was referring to. He implied that this was a recommendation for Brazil at the end of the “High Level Seminar on Central Banking: past and present challenges”.
“We spend a lot of time discussing whether the Selic rate is high or low and what we have to do. It’s our job. But when we look beyond that, we need to focus on the fact that we must carry out structural reforms, which reduce the neutral interest rate and increase structural growth.”, stated Campos Neto.
“We talk to economists and ask what Brazil’s structural growth is and they say 1.5%. Some say even less”, he said, referring to GDP (Gross Domestic Product) growth when speaking in the last panel, in which he was the moderator.
“At the moment, the balance between high debt, higher neutral rate and low structural growth is very dangerous.”, also said the BC president.
At the opening of the seminar, the Minister of Finance, Fernando Haddad, also implicitly criticized the country’s high basic interest rate, but without referring directly to the Central Bank.
“Whenever I hear the monetary authority say that, to fight an infection, you have to take the entire antibiotic pack, I also remember the observation that you don’t have to take two packs. You have to take the right measure so that the economy manages to adjust itself from the macroeconomic point of view and guarantee the conditions for sustainable growth.”, said Haddad.
HELP FROM FRIENDS
Argentine economist Federico Sturzenegger said at the seminar that Brazil and Argentina should set up a multilateral body. In his evaluation, this could help his country to lower inflation. The accumulated rate in 12 months in the country reached 108.8% in April.
“Argentina defaults on its debt every day. But it does not default on the IMF. Argentines respect multilateral organizations”, these.
He also stated, addressing Campos Neto, who was in the audience, that Argentina needs “from the help of your friends”, alluding to the song “With a Little Help of My Friends”, by the Beatles. There was laughter in the audience. Sturzenegger chaired the Central Bank of Argentina from 2015 to 2018, under President Mauricio Macri.