Brazilian President Jair Bolsonaro signed into law on Wednesday a legislation that establishes the autonomy of the country’s central bank to make sure it is free of political interference.
The law does not change the way the bank sets interest rates but cushions it from politics by setting fixed four-year terms for its governor and directors that will no longer coincide with the presidential election cycle.
The bank’s president will also no longer be part of the cabinet of ministers.
Bolsonaro praised the bank’s current head Roberto Campos.
“I only signed this law because I have confidence in your ability and integrity,” the president said.
The monetary authority already had de facto autonomy to implement policies deemed necessary to achieve its inflation-targeting goals, but the bank president was technically a member of the cabinet appointed by Brazil’s president.
The law stipulates that the bank’s secondary objectives after fighting inflation include ensuring the stability of the financial system, smoothing fluctuations in the economic cycle, and promoting full employment.
Economists said it will help foster economic stability, business confidence and attract investment.