(Bloomberg) -- Brazil’s real rose and swap rates fell after one of Luiz Inacio Lula da Silva’s cabinet members said the administration will respect a law that gives autonomy to the central bank despite the president’s growing attacks against the monetary authority.  

Institutional Relations Minister Alexandre Padilha also told reporters on Wednesday that the government isn’t considering ways to cut short the terms of central bank chief Roberto Campos Neto or any of the bank’s board members, who are now protected by the autonomy law. 

“There is no discussion in the government to change the current central bank law and no pressure to cut short any mandate,” Padilha told reporters after a meeting with Lula and party leaders.

The Brazilian real erased early losses and gained 0.1% in afternoon trade in Sao Paulo. Swap rates in contracts that expire in January 2024 and January 2025 fell 12 basis points and 28 basis points, respectively. Those maturities signal trader bets on Brazil’s key rate at end-2023 and end-2024, respectively.

Lula has escalated his feud with the central bank over the past few weeks, saying that interest rates at 13.75% make it “impossible“ to boost growth, that the bank’s autonomy law is “nonsense” and that Brazil should have a higher inflation goal. Currently, the country targets price increases of 3.25% in 2023 and 3% for the next two years. Annual inflation stands at 5.87%.

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“Padilha is trying to downplay barbs between the central bank and Lula,” said Valter Filho, a foreign-exchange trader with Opportunity, a money manager in Brazil. 

Jayro Rezende, treasury director at Bank of China Brasil SA, said Padilha’s comments gave a boost to local assets in the short term, “but it takes more than words to normalize prices consistently.”

Lula Slams Monetary Policy, Interest-Rate Forecasts Jump: Chart

Lula is the first Brazilian president who’s unable to pick a central bank chief after congress approved a law giving the institution its long-sought autonomy.

“The president is expressing the pain and the anxieties of those who want lower interest rates in the country so that businesspeople can invest more,” Padilha said.

--With assistance from Raphael Almeida Dos Santos.

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