A new chapter at Brazil’s central bank: What’s in store?
Brazilian President Luiz Inácio Lula da Silva's administration has named Gabriel Galípolo as the new governor of the central bank.
The appointment of Galípolo, a 42-year-old economist who is currently director of monetary policy at the bank, now must be assessed and approved by the senate.
If given the green light, Galípolo will replace Roberto Campos Neto when his tenure concludes at the end of 2024 and he will head the bank until the end of 2028.
"Although not yet a certainty, Galípolo's appointment will probably increase the chances of the central bank raising interest rates in the coming meetings, as the monetary authority tries to gain more credibility with investors to demonstrate that it is independent of political pressure," Mário Sérgio Lima, an analyst at Medley Global Advisors, told BNamericas.
The central bank is led by eight directors and one governor, who together determine the Selic base rate every 45 days. In 2021, the bank became independent, with directors serving fixed terms of four years.
“The appointment is still subject to approval by the senate, so out of respect, I will be brief, but I would like to say that it is an honor, a pleasure and an immense responsibility to be nominated for the governorship of the central bank of Brazil,” Galípolo said in a statement.
Current bank governor Campos Neto was named for the post by Lula's predecessor Jair Bolsonaro, and since assuming power in January 2023, the president has repeatedly criticized him for his focus on inflation and for keeping the Selic rate high.
"Lula's fierce criticism against Campos Neto was closely related to the central bank governor's connection to Bolsonaro. The fact that Galípolo was appointed by the Lula administration will reduce the government's criticism against the central bank, even if it's obliged to increase interest rates under the new administration," said Lima.
Galípolo was president of local bank Fator between 2017 and 2021, and before being appointed to his current position at the central bank, in 2023 he became the executive secretary of the finance ministry and is considered a close ally of finance minister Fernando Haddad.
"The fact that Galípolo has been a member of the central bank board of directors for over a year, participating in all discussions and decisions on monetary policy, has given him the perfect background to assume the governorship of the monetary authority," Isaac Sidney, president of Brazilian banking federation Febraban, said in a statement.
Interest rate challenges
The transition at the central bank is taking place at a challenging time.
At the end of July, the central bank rate committee, Copom, decided to keep the Selic unchanged at 10.5% but it has not ruled out hikes if price pressures do not cede.
The bank’s hawkish tone comes as annual inflation has climbed to the upper end of the target range. The inflation rate was at 4.35% in mid-August, the most recent figure available, according to statistics bureau IBGE, while the monetary authority's inflation target for this year is 3%, with a tolerance range of 1.50-4.50%.
The central bank is concerned about inflation because economists have rising expectations of future price increases due to the government's fiscal numbers, which have deteriorated because of higher public spending and the expansion of the labor market, which are raising the pressure on prices.
Subscribe to the leading business intelligence platform in Latin America with different tools for Providers, Contractors, Operators, Government, Legal, Financial and Insurance industries.
News in: Political Risk & Macro (Brazil)
Brazil's sustainable fuel program to stimulate demand, provide legal security
The measure promotes the integration of various public policies related to the transport sector, such as the national biofuels policy.
São Paulo state to restructure regulatory agencies
The overhaul could also affect the state's PPP and concessions agenda.
Subscribe to Latin America’s most trusted business intelligence platform.
Other projects
Get key information on thousands of projects in Latin America, from current stage, to capex, related companies, key contacts and more.
- Project: Onshore gas conditioning station for Lakach
- Current stage:
- Updated:
18 hours ago
- Project: Magistral
- Current stage:
- Updated:
2 days ago
- Project: Anto Ruiz I and II hydro plants - Phase 2
- Current stage:
- Updated:
2 days ago
- Project: Corentyne River Bridge
- Current stage:
- Updated:
2 days ago
- Project: Engenho Photovoltaic Complex
- Current stage:
- Updated:
2 days ago
- Project: Cumayasa 4 solar park (former Renewable Energy World Dominicus)
- Current stage:
- Updated:
2 days ago
- Project: Flow Transfer from the Sao Francisco River to the Salgado Tributary
- Current stage:
- Updated:
2 days ago
- Project: New Arauco hospital (San Vicente de Arauco Hospital)
- Current stage:
- Updated:
2 days ago
- Project: Teniente Project Portfolio - Diamante (ex New Mine Level)
- Current stage:
- Updated:
2 days ago
- Project: Epizana - Comarapa Highway Stretch Rehabilitation and Reconstruction
- Current stage:
- Updated:
2 days ago
Other companies
Get key information on thousands of companies in Latin America, from projects, to contacts, shareholders, related news and more.
- Company: Industrial Fabrications Inc.
- Company: Guyana Oil and Gas Support Services
- Company: Terminal Portuário de Macaé Ltda.  (TEPOR)
-
The description contained in this profile was taken directly from an official source and has not been edited or modified by BNamericas researchers, but may have been automatical...
- Company: Carlos Caballero S.R.L.  (Carlos Caballero)
-
The description contained in this profile was extracted directly from an official source and has not been edited or modified by BNamericas researchers, but may have been machine...
- Company: Enel Generación Chile S.A.  (Enel Generación Chile)
-
Enel Generación Chile S.A., formerly known as Endesa Chile, is a Chilean electricity generator and supplier in Chile with a generator park of 110 units and an installed capacity...
- Company: Tinguiririca Energía S.A.  (Tinguiririca Energía)
-
Tinguiririca Energía S.A is a Chilean hydro generation company founded in 2004 as a joint venture equally owned by Australia's Pacific Hydro and Norway's SN Power. Its operation...
- Company: PetroTal Corp.  (PetroTal)
-
The description included in this profile was taken directly from an official source and has not been modified or edited by the BNamericas’ researchers. However, it may have been...
- Company: Arauco Bioenergía S.A.  (Arauco Bioenergía)
-
The description included in this profile was taken directly from an AI source and has not been edited or modified by BNamericas researchers. However, it may have been automatica...