(Bloomberg) -- President Luiz Inacio Lula da Silva’s nominees for Brazil’s central bank board are unlikely to take office in time for the next interest rate decision, when policymakers could give the first hints of an expected monetary easing cycle.
Lawmakers are expected to delay required public hearings for deputy finance minister Gabriel Galipolo and career central bank employee Ailton Aquino until after the June rate decision meeting, according to two people with knowledge of the matter. That could prevent noise in the market amid expectations that Galipolo could be a voice in the committee to push for a looser monetary policy, the people said.
Policymakers led by Roberto Campos Neto are expected to hold interest rates steady at 13.75% for the seventh straight time at the June 20-21 meeting. But central bankers may provide an indication of when they plan to loosen the policy as inflation eases. Postponing the directors’ public hearing would avoid the interpretation of political pressure at that moment, according to one of the people, who requested anonymity since discussions are ongoing.
Senators will vote on the appointments after the Corpus Christi holiday on June 8, Senate chief Rodrigo Pacheco told journalists Thursday. They haven’t yet set a date for the audience, according to Vanderlan Cardoso, president of the commission in charge of the approval.
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Galipolo has attempted to defuse tensions between the central bank chief and Lula, who has publicly said current monetary policy is “absurd,” fails to address the root causes of inflation and boosts unemployment. Along with Finance Minister Fernando Haddad, he spent recent months taking Lula’s concerns to Campos Neto and working to calm down the president.
A quiet period during which new directors cannot address investors or the press begins on June 14, and appointees usually assume their roles before that. The government could push to have Galipolo on the board just in time for the interest rate decision in August, when most traders bet rate cuts will begin, according to the people.
Galipolo met this week with a group of senators, the first of a series of meetings with the legislators in charge of his approval — a tradition for new central bankers.
Senators are conducting the nominations “as quickly as possible,” said senator Cardoso. “They are two very important positions that need to filled,” he said.
Galipolo is nominated for director of monetary policy, a post vacant since February and filled by current director of economic policy, Diogo Guillen. Aquino is appointed for director of supervision.
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