(Bloomberg) -- President Luiz Inacio Lula da Silva and central bank chief Roberto Campos Neto agreed to talk more often during a much-anticipated meeting at the presidential palace, their first face-to-face encounter following months of tension between Brazil’s leftist leader and the monetary authority.
Finance Minister Fernando Haddad, who participated in the meeting late Wednesday, said they had a “friendly and productive conversation” and that Lula told Campos Neto he will respect the central bank’s constitutional autonomy.
Since taking office in January, the president had been publicly criticizing Campos Neto and the central bank’s policy of high interest rates, which he considers a major obstacle to the economic prosperity he has promised to deliver.
“It was an institutional meeting to build the relationship,” Haddad told reporters after the conversation, adding that they agreed to hold periodic talks. “It was excellent.”
Speaking to Campos Neto, Lula repeated his criticism of Brazil’s high benchmark rate and expensive credit, but did so in a polite way, according to a government official with knowledge of the matter. The president also stressed he has a history of fiscal responsibility in office, the official added, requesting anonymity to provide more details of the meeting.
In an unrelated news conference on Thursday, Campos Neto refused to answer questions about his interaction with Lula. “I’m trying to build a relationship based on trust, and the agreement was that I wasn’t going to talk about it,” he told reporters.
In recent public speeches, Campos Neto and other central bank board members have expressed concern about the implementation of Lula’s fiscal plan, which aims to eliminate Brazil’s primary budget deficit next year. Economists say that is a lofty goal, considering the government doesn’t intend to cut expenses but instead raise revenue through a series of measures that require congressional approval.
Campos Neto, who had requested the meeting in a letter to Lula, has made a series of gestures to appease the president in recent months. The latest came Wednesday morning, when he said during a congressional hearing that the central bank isn’t in opposition to the government, and that he’s ready to talk to the president whenever he is called.
Read More: Lula to Meet Brazil Central Bank Chief Seeking to End Feud
Campos Neto was appointed by Jair Bolsonaro in 2019 and has been frequently criticized by legislators from the ruling Workers’ Party, who consider him an ally of the former president. Lula is the first president to face a central bank whose chief he hasn’t picked. Campos Neto’s term, ensured by the autonomy law approved by congress in 2021, goes until the end of 2024.
Investors have interpreted the conciliatory moves by both men as gestures of goodwill that were only possible after the central bank started to lower borrowing costs. After keeping the benchmark Selic at a six-year high of 13.75% for 12 months, policymakers have delivered two cuts of half a percentage point each and promised at least two more of the same magnitude by the end of the year.
--With assistance from Maria Eloisa Capurro.
(Updates with Campos Neto’s declining to comment on the meeting in paragraph in sixth paragraph.)
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