From Stiglitz's perspective, Copom condemns the economy to a death sentence.

During a seminar at BNDES in March 2023, Nobel laureate in Economics Joseph Stiglitz said that “Brazil’s interest rate is shocking. A rate of 13,75%, or 8% real, is the kind of interest rate that will kill any economy. It’s impressive that Brazil has survived this, which would be a death sentence.”

At the time, the president of the "independent" Central Bank was Roberto Campos Neto, appointed by Bolsonaro, not Lula.

Politicians from the government's base, analysts, and economists considered the Bolsonaro-aligned president of the Central Bank a saboteur. The Workers' Party (PT) denounced that Campos Neto used "the institution as a kind of bunker for the economic sabotage of the country and a platform for political-partisan articulation" of the far-right. In the 2024 resolution of the National Directorate, the Party declared that "Campos Neto has become the biggest obstacle to the country's growth."

President Lula complained a lot. On one occasion, he exclaimed: "There is no justification for the 13,5% interest rate; just look at the Copom letter to see what a shame this interest rate increase is and the explanation they gave to Brazilian society."

Haddad also criticized: "You're not going to correct the 2024 inflation by raising interest rates."

Reacting to the second consecutive increase in the Selic rate during Gabriel Galípolo's term, last May José Dirceu said he considered it "a crime for Brazil to have such a high interest rate" of 14,75%.

What would Stiglitz say today, seeing Galípolo and the majority of Copom directors appointed by Lula raising the Selic rate to 15%, bringing real interest rates to around 10% above inflation?

The Copom statement, based on the highly suspect Focus Bulletin, uses an alarmist and unrealistic tone to justify the monetary tightening: "the scenario continues to be marked by unanchored expectations, high inflation projections [...]".

"Inflation expectations for 2025 and 2026, as measured by the Focus survey, remain above the target, standing at 5,2% and 4,5%, respectively," the statement said.

Frankly, inflation around 5% per year in Brazil cannot serve as an argument for obscenely high interest rates, which will drain more than one trillion reais from the Union's budget this year alone.

In the 26 years since the adoption of the inflation targeting system in 1999, the average annual inflation in Brazil was 6,3%, and yet there wasn't such an uproar.

The problem, therefore, is not inflation, which is actually within the historical pattern of the national economy. The problem is the absolutely unrealistic inflation target of 3% set by the government, when the average inflation target over the 26 years of the target system was 4,63% – 54% higher than the current 3%.

The Copom clings to this misguided target to continue imposing "a significantly contractionary monetary policy for a fairly prolonged period."

When Lula's appointed members of the Central Bank were in the minority, the unanimous decision in the Monetary Policy Committee (Copom) in favor of high interest rates was justified as a tactical choice to avoid inciting the market against the government.

Starting in January of this year, with the majority of the government in the Copom (Monetary Policy Committee) opting to continue the exact same monetary policy as Campos Neto and unanimously voting in favor of high interest rates, the explanation became that one cannot make a U-turn on an ocean liner.

Since Galípolo and its board show no sign of any change in monetary policy, even a slow and gradual one, the transatlantic ship will continue on this course that benefits rent-seeking and is detrimental to the country.

There are less than 16 months until the 2026 election. The national economy and the Lula government will need to resist with great strength to avoid succumbing to the death sentence decreed by the "shocking" interest rate in Brazil, as Stiglitz describes it.