Lula taps diplomatic ex-banker to shake up Brazil central bank

By Marcela Ayres, Lisandra Paraguassu and Rodrigo Viga Gaier BRASILIA, May 10 (Reuters) - Brazil's President Luiz Inacio Lula da Silva has moved to shake up the central bank with a new monetary policy director known for his diplomatic skills, after traversing divides in the public and private sectors. Gabriel Galipolo, the former CEO of investment bank Banco Fator and now second-in-command at the Finance Ministry, was tapped along with a career civil servant for two key roles at the central bank on Monday. His nomination must still be formalized by the government and approved by the Senate. While Lula has blasted the central bank since he took office in January for keeping interest rates high as inflation cools, Galipolo remained discreet about the subject and kept up close dialogue with central bank chief Roberto Campos Neto. Galipolo is likely to arrive at the central bank just as the bank's interest rate-setting committee is preparing for a cycle of rate cuts, making that the "natural" path rather an agenda for him to impose, said a person familiar with the matter. A second source, who also requested anonymity to discuss sensitive matters, said Campos Neto recognizes Galipolo's openness to dialogue and he expects the new director to bring views on monetary policy that diverge from the current board. A new law establishing the central bank's formal autonomy has put Campos Neto in the tricky position of overseeing a board that will be gradually replaced by Lula in the coming years, bringing policy views into sharper contrast. Campos Neto has signaled he is ready to incorporate diverging views, telling senators, "I am just one vote among the nine members" of the bank's rate-setting committee, Copom. He said it is natural for directors to hold differing opinions, which the central bank's official communication aims to highlight when it occurs.

The next Copom meeting is scheduled for June 20-21. Lula will eventually replace all board members, gaining a majority once Campos Neto's term ends in December 2024.

GODSON Galipolo gained Lula's confidence thanks to a longstanding relationship with Luiz Gonzaga Belluzzo, a key Lula advisor and economics professor at Unicamp, a Sao Paulo university known for its heterodox thinking.

In his 2008 master's dissertation in political economy from the Pontifical Catholic University of São Paulo (PUC-SP), Galipolo thanked his Unicamp mentor, calling himself Belluzo's "godson." The dissertation advocated state intervention in organizing the economy to prioritize social needs. "He is a very open person, available for debate, and highly knowledgeable," said Belluzzo, who later co-authored books and articles with Galipolo, in an interview with Reuters. Galipolo's career has been marked by seamless transitions across several domains: he previously served as an economic adviser to the Sao Paulo state government under center-right Governor Jose Serra, became familiar with financial markets as a banker and served as an adviser on public-private partnerships. During Lula's new government, Galipolo has been a key player in major policy debates in the Finance Ministry, including new fiscal rules awaiting congressional approval, which have already eased concerns about the rising public debt. In a document published last year by the think tank Cebri on policy guidelines for 2023, Galipolo and a group of economists emphasized that "monetary and fiscal macroeconomic policies are not independent and must be coordinated," a mantra Finance Minister Fernando Haddad has repeated consistently.

Cebri also suggested the central bank should act on the entire yield curve, similar to the Bank of Japan, a possibility Campos Neto has already publicly dismissed, saying it would lead to growing reliance on short-term financing, which he called "terrible." (Reporting by Marcela Ayres and Lisandra Paraguassu in Brasilia, Rodrigo Viga Gaier iN Rio de Janeiro; Editing by Chizu Nomiyama)

Reuters

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

off-the-wire

Lula taps diplomatic ex-banker to shake up Brazil central bank

By Reuters

Reuters

Reuters

Gold is never going back to $2,000: 'That's history,' prices to 3x from here – Peter Schiff

‘Biggest economic shift since Nixon’: Major U.S. monetary policy changes coming in 12-36 months – Jack Mallers

India joins South Africa in denying BRICS currency plans after Trump’s 100% tariff threat

Solid price gains for gold, silver after busy news weekend

Bitcoin remains a ‘speculative vehicle’ and ‘won’t work’ as a reserve: ‘I prefer gold’ – Ray Dalio