beyondbrics

Alexandre Tombini, the next president of Brazil’s central bank, says he is confident there will be no change in the way the bank has pursued inflation targeting free of political interference. But his staff are not so sure.

In an extraordinary statement this afternoon, the union representing the bank’s workers criticised recent statements by Dilma Rousseff, president elect, and called on her to grant the bank full legal independence, as opposed to the operational variety it has enjoyed at president Luiz Inácio Lula da Silva’s pleasure.

Its statement begins:

At a time when public statements suggest intervention in the Central Bank’s monetary policy, SINAL, the National Union of Central Bank Workers, has written to the president elect, Dilma Rousseff, in defence of the institution’s autonomy.

What public statements are these? A union spokesperson explains:

“There have been lots of articles and declarations by Dilma calling for a reduction in interest rates. The union interprets this as political intervention.”

The letter itself is a bit more circumspect. Here are some extracts:

The Central Bank of Brazil enjoys immense and deserved prestige in Brazil and around the world. Our institution has acted incessantly, in an autonomous manner, to guarantee the purchasing power of the currency and to ensure that the financial system is strong and healthy.

At a time when the policies of the future Dilma government are being defined, various political actors have expressed their opinions about the Central Bank. We wish to underline the importance of Brazil having a Central Bank – an organ of the State – that is strong and autonomous in the conduct of the continuous processes necessary to confer economic stability and the control of inflation.

We call for the legal autonomy that is necessary for the Central Bank to be able to continue its work in the firm and secure manner it has done so until now.

The message is clear: operational independence is not enough; it has to be guaranteed by law.

They won’t get what they want, of course. Nor will they win themselves any fans at the presidential palace,  by making this statement in the immediate aftermath of Tombini’s appointment, at a time when markets are in a state of high nervousness over whether to trust assurances of continuity and of a coming wave of fiscal austerity.