BCB Needs New Personnel to Regain Market’s Confidence: Analysts
(Bloomberg) -- The replacement of BCB’s top management is needed for the bank to regain credibility, two of Brazil’s main consultants say.
- “The team must be replaced. BCB credibility is very low”, Alexandre Schwartsman, managing partner at consultancy firm Schwartsman & Associados says in a phone interview
- If current BCB team stays, any rate cuts in near future may be viewed with distrust by investors as the BCB has failed to meet inflation target in almost 6 years prior
- BCB policy of using FX interventions to curb BRL losses and ease inflation, instead of raising rates further, was part of President Rousseff’s economic mismanagement during her first mandate, Nathan Blanche, partner at Tendencias Consultoria says
- BCB’s next team may continue offering reverse FX swaps to curb its $66b position in regular swaps built during Tombini’s administration of BCB; however, excess intervention must be avoided, Blanche says
- Delfim Netto, former FinMin, also said BCB is likely to keep acting in FX; both BCB and an eventual Temer administration should avoid BRL appreciation, which could harm exports, he says
- NOTE: Estado said on May 5 that president Temer didn’t rule out maintaining Tombini as BCB governor, while other reports have shown ex-BCB directors Goldfajn, Mesquita, Bevilaqua and Loyo and former Treasury secretary Kawall among likely Temer picks to head BCB should Pres. Rousseff be ousted as expected
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Alexandre Schwartsman (Schwartsman & Associados)
Afonso Bevilaqua (Banco Central do Brasil)
Antonio Netto (Federative Republic of Brazil)
Carlos Kawall Leal Ferreira (Banco J Safra)
Eduardo De Mello Motta Loyo (Banco BTG Pactual SA)
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