Campos Neto Ties High Brazil Rates to Fiscal Credibility Gap, Sees Only Modest Cuts in 2026

Overview

• The former central bank chief said elevated interest rates reflect weak fiscal credibility and rising public debt, urging a positive credibility shock to restore confidence.
• He projected that the Selic could edge lower next year but only gradually and by a small amount due to election-driven volatility in 2026.
• Campos Neto criticized the recent U.S. tariff package on Brazilian exports, saying policy swings deter medium‑term investment and hurt all sides.
• Asked about a reported 50% levy on some Brazilian products, he said forecasting a reversal is difficult given low predictability in U.S. trade decisions.
• He praised the institutional transition at the Banco Central, endorsed current president Gabriel Galípolo’s approach, and noted the upcoming departures of directors Renato Gomes and Diogo Guillen.