the President elect of Brazil should ask the President of the central bank, Ilan Goldfajn, to stay for a while. Goldfajn should politely decline.
Goldfajn has done a real public service in his two years at the head of the central bank. While the political class has been weakened and failed, he was the adult in the room and took the rate to an all-time low. Inflation, for a long time the curse of Latin America, is negligible.
That is exactly the reason why Jair Bolsonaro should ask him to remain in charge of the central bank. But the reality is that, sooner or later, the incoming President of Brazil will want their own person in that position. Keep the head of the central bank of the former Administration probably would have at hand a scapegoat, someone who fired when there is an economic error.
Bolsonaro team has delivered the correct speeches on the independence of the central bank. However, the autonomy of the Central of Brazil has never been something safe, and now – under a President-elect with a forceful victory after dismissing politics as always and the promise govern very differently – independence standards are even less secure.
The best thing for Goldfajn is returning to the private sector. It is sobrecalificado for the role of scapegoat. His reputation, already impressive before leading monetary policy, has improved. The economy is growing after a deep recession, and implemented significant reforms in the operations of the Bank. Goldfajn leaves it in the best form of which found him. For his two years as possibly the true leader of Brazil: thank you, Ilan Goldfajn.
He has been consistent in the messages you send. Early on he recognized the need and the opportunity for deep rate cuts, and executed them almost flawlessly. Goldfajn also modernized communications. No more classic nights of the developing world in anticipation of a statement which can be reached at any time and by any means. Monetary policy meetings ended around 6 p.m. local time and the decision and a comment on the matter is emitted in a few minutes.
It seems that a dance is happening. My colleagues from Bloomberg News reported prior to this week’s Goldfajn plans from splitting. Representatives of President-elect have sent signals (with varying degrees of conviction) that want to stay. But we all know what will happen if it stays.
Bolsonaro is selling false miracle potions. Like other Presidents who themselves tough guys, when your potion does not work, you will attack it. Better that it working against their own elected to lead the central bank.
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