Campos Neto criticized social policies and public spending at an event in the United States

JACKSON HOLE, U.S. (Reuters) – The head of the central bank, Roberto Campos Neto, said this Saturday that it would be difficult to change monetary policy without addressing fiscal problems, citing the growing weight of public debt in the face of an expansion in government spending.

Speaking at the Kansas City Federal Reserve’s annual economic conference in Jackson Hole, Wyoming, Campos Neto highlighted that the cash transfer programs implemented during the pandemic are now large and permanent.

In Brazil, 50 million people “earn money from the government, 43 million people are employees and entrepreneurs,” he added.

Without directly referring to the government of President Luiz Inácio Lula da Silva, he said: “We need to think about a precise strategy and understand the effectiveness of these government programs, especially in emerging market countries, what it has done to debt.”

“I think we need to better communicate the misallocation of resources.”

In July, BC kept the target at 10.5% for the second time in a row, but toughened its rhetoric, citing an even greater need for careful monitoring and diligent monitoring of the factors controlling inflation.

In closing minutes, it said it was closely monitoring how recent fiscal developments affect monetary policy and financial assets, amid market concerns that Lula’s government will not eliminate the primary deficit this year and next due to higher spending.

“From now on we have to address the debt taking into account the dynamics of the markets, and unfortunately, it’s very difficult to talk about exchange (monetary policy) without talking a little more about fiscal issues,” Campos Neto said. Ends in December.

Campos Neto said the recent volatility may show that the market expects less room for fiscal and monetary interventions in the future.

Speaking about the slowdown in China’s economy, the BC president said it could affect Brazil through a shock to trade or a reduction in import prices of Chinese goods, although the net effect would depend on the extent of the slowdown.

This week, central bankers from around the world traveled to Jackson Hole to attend the world’s premier economic meeting, the annual symposium in Grand Teton National Park.

Panelist Campos Neto discussed monetary exchange, or how much interest rate movements affect economic activity.

The BC president’s comments followed recent communication efforts by members of the monetary authority to stress that they must be united in considering all options for the next decision, scheduled for September 17-18.