Lula Backs Central Bank Chief, Bets Selic 15% Will Ease in Time

President Luiz Inácio Lula da Silva used the launch of the R$89 billion Plano Safra 2025/2026 on Monday to defend Central Bank president Gabriel Galípolo, calling him “very serious” and predicting that the current high interest-rate environment “will be corrected over time.” Lula argued that rural credit lines under the new package carry effective rates as low as 2%–5% a year, far below the headline Selic, and said the government must communicate more clearly the difference between nominal and real borrowing costs. Lula’s conciliatory tone toward Galípolo contrasts with the harsh criticism he levelled at former Central Bank chief Roberto Campos Neto. Since Galípolo took office in January, the Monetary Policy Committee has raised the Selic seven times, lifting it to 15%, the highest level since 2006. The president reiterated he would “like the rate to be zero” but acknowledged the Central Bank’s legal independence and said he is confident policy will ease once economic conditions allow. The Plano Safra programme earmarks subsidised financing for family farmers and small agribusinesses, including funds for mechanisation and a transition to agro-ecological practices. Lula framed the initiative as part of broader efforts to stimulate growth while working toward what he called a fairer credit and tax structure. The government expects the subsidised rates and expanded credit to boost productivity and rural incomes even as benchmark borrowing costs remain elevated.