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Lula and the threat to the BCB’s independence

Brazil’s president Lula seems to be on the warpath in his quest for lower interest rates and now has the central bank’s (BCB’s) independence in his sights. Were Lula to get his way, the experience from Brazil in the early 2010s and elsewhere in the emerging world suggests that this would cause inflation to drift up and, ultimately, require a long period of high real interest rates further down the line.

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