Business · Economy · 4 hrs ago
Lara Resende's proposal to cut Brazil's interest rate draws scrutiny
André Lara Resende has proposed changes to Brazil's economic policy that would sharply lower the country's benchmark interest rate, the Selic.
He argues that high interest payments, not government spending, are driving up public debt and that lower rates could reduce the cost of servicing it.
His proposal would cut the Selic from 13.75% to 7.5% within a year, then keep it between 3.5% and 5.5%.
It would also create a council to set fiscal and monetary goals, changing how the Central Bank makes decisions.
Critics warn that this could weaken the bank's role in controlling inflation, and that using foreign reserves to support the currency could unsettle investors.
Finance Minister Dario Durigan says the proposal is not on President Lula's agenda, and no meeting with Lara Resende is scheduled; officials say Lula may hear from economists with different views.
Economist André Lara Resende’s proposal to limit Brazil’s Selic rate has drawn scrutiny from the financial market and economists.
The proposal would change how fiscal and monetary policy are coordinated, and includes creating a council to set targets with the Central Bank.
Lara Resende argues that high interest costs, rather than primary spending, are driving the growth of public debt.
The proposal has prompted concern that it could weaken the Central Bank’s independence and increase inflation.
Finance Minister Dario Durigan said no plan to cap interest rates is before President Luiz Inácio Lula da Silva.
- Who
- Economist André Lara Resende proposed changes to Brazil’s interest-rate policy. President Luiz Inácio Lula da Silva and Finance Minister Dario Durigan are also central to the debate.
- What
- Lara Resende proposes limiting the Selic rate through a new arrangement between fiscal and monetary policy. His proposals include a fiscal and monetary council.
- When
- The proposal drew attention in reports published on November 1 and 2, 2026. Lara Resende’s article was published in late September.
- Where
- Brazil.
- Why
- Lara Resende argues that high interest costs are driving public debt growth. Critics warn the proposals could undermine the Central Bank’s role and raise inflation.
André Lara Resende
Critics of the proposal
Cause of public debt
André Lara Resende
High interest costs, rather than primary government spending, are the main cause of debt growth.
Critics of the proposal
Critics question the proposal’s effects and warn that it could weaken monetary policy and increase inflation.
Interest-rate policy
André Lara Resende
The Selic should be reduced through a new arrangement between fiscal and monetary policy.
Critics of the proposal
Critics say the Central Bank needs freedom to make difficult decisions to bring inflation to its target.
Use of reserves
André Lara Resende
The proposal includes using international reserves to curb the dollar’s rise during a potential investor outflow.
Critics of the proposal
Lucinda Pinto warned that using reserves to control capital outflows could prompt investors to leave.
Lara Resende published an article arguing that high interest rates, rather than primary spending, are the main fiscal problem.
Folha reported that the proposal had drawn market concern and could be brought to Lula’s attention.
CNN Brasil analyzed potential effects of the proposal, including a lower Selic and a fiscal and monetary council.
Dario Durigan told Folha that no proposal to cap interest rates was before Lula and no meeting with Lara Resende was scheduled.
- Current Selic rate
- 13.75% a year
- Proposed Selic reduction
- From 13.75% to 7.5% within up to one year, according to CNN Brasil
- Proposed longer-term rate range
- 3.5% to 5.5%, according to CNN Brasil
- International reserves
- About US$360 billion
- Estimated fiscal adjustment
- At least R$250 billion over four years, according to Folha
- Gross public debt
- 82.5% of GDP in one Folha report; 82.9% in another
4 sources
Análise: Veja os possíveis efeitos da proposta econômica de Lara Resende
Cortar a Selic pode fazer a inflação cair? Entenda a tese de Lara Resende
Proposta de Lara Resende para limitar Selic assusta mercado; Durigan nega discussão no governo
Proposta de Lara Resende para limitar Selic entra no radar de Lula e assusta mercado
What people are saying
Não há nenhuma reunião agendada entre o presidente e Lara Resende. Há uma série de economistas que se colocaram à disposição para colaborar, em contato com Aloízio Mercadante [presidente do BNDES], mas não há encontro previsto
Hoje o Banco Central tem justamente o mérito de tomar decisões difíceis, muitas vezes impopulares, pensando em garantir a convergência da inflação para a meta. Isso roubaria do Banco Central a liberdade para fazer o que ele precisa fazer
Toda vez que o Banco Central tenta usar reserva para controlar a saída de investidor estrangeiro, aí é que o mercado vai embora
Os economistas tratam isso quase como uma utopia
Posts on X
Artigo de André Lara Resende, publicado em 25 de setembro, é fundamental para enfrentar essa ofensiva terrorista sobre a política fiscal brasileira: “Acuso o Banco Central de sustentar, em nome de uma teoria anacrônica, a taxa de juros que é a principal causa do desequilíbrio