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Brazil's monetary policy director leaves office amid government uncertainty over replacement

Published 03/27/2023, 11:19 AM
Updated 03/27/2023, 11:22 AM
© Reuters. FILE PHOTO: People walk in front the Central Bank headquarters building in Brasilia, Brazil March 22, 2022. REUTERS/Adriano Machado/File Photo

BRASILIA (Reuters) - Brazil's central bank monetary policy director Bruno Serra has left his position at his request, according to the official gazette on Monday, backdated to March 23, while the new administration of President Luiz Inacio Lula da Silva has yet to announce a replacement candidate.

The central bank stated in a note that Serra's departure follows the end of his term on Feb. 28.

He remained in his position until last Wednesday's monetary policy decision, in which policymakers defied government pressure and held interest rates at a six-year high of 13.75%, indicating that there was no room for monetary easing in the short term.

The day after Serra's departure, the director of Economic Policy, Diogo Guillen, began temporarily accumulating his function, a common practice at the central bank until substitutions are made. After the nomination by the president, the names still need to be approved by the Senate.

Supervision director Paulo Souza, whose term also expired at the end of February, remains in his current position.

Sources reported last week that Lula had agreed to nominate former bank executive Rodolfo Froes to replace Serra and career civil servant Rodrigo Monteiro to take over Souza's position. Still, the president has yet to make an official announcement, and Froes' nomination has come under fire from more left-leaning government allies.

© Reuters. FILE PHOTO: People walk in front the Central Bank headquarters building in Brasilia, Brazil March 22, 2022. REUTERS/Adriano Machado/File Photo

Institutional Relations Minister Alexandre Padilha told reporters on Monday that Finance Minister Fernando Haddad and Lula have yet to decide on nominees for both positions.

Under a 2021 law granting formal autonomy to the central bank, Governor Roberto Campos Neto will remain in office until December 2024. Lula, who has criticized Campos Neto and the central bank for keeping interest rates high to combat inflation, will eventually replace all nine members of the bank's board, which decides monetary policy.

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