The moves by both Campos Neto and Lula were seen as goodwill gestures that were only possible now that the central bank has started to lower rates, the people said, requesting anonymity because the matter isn’t public. The last time they met was during the transition government, with Lula’s team viewing Campos Neto as arrogant, according to the people.

The central bank didn’t immediately reply to a request for comment.

After taking office, Lula criticized the central bank several times, questioning the need for its autonomy and bashing Campos Neto for keeping rates at a six-year high. Since then, however, the mood has improved, the people said.

At a congressional hearing Wednesday morning, Campos Neto emphasized the central bank’s role as a “partner” of the government, while defending the institution’s recently won constitutional autonomy to decide on monetary policy.

“The central bank works to improve the country,” he said during the hearing, which had some heated exchanges with lawmakers. Campos Neto was appointed by Jair Bolsonaro in 2019 and has been frequently criticized by legislators from the ruling Worker’s Party who consider him an ally of the former president.

“We have to work hand in hand, the central bank is not the opposition,” Campos Neto said. “Whenever Lula calls me, I will go.”

Last week, the central bank cut its benchmark interest rate by half a percentage point for the second straight meeting to 12.75%, signaling it will keep the same pace of easing at least through year’s end. In minutes to the meeting, the monetary authority said it’s “unlikely” to speed up the pace of rate cuts as inflation expectations remain “a matter of concern,” in what many analysts considered a hawkish message.

Read More: Above-Goal Inflation Crushes Brazil Hopes for Bigger Rate Cuts

Campos Neto told lawmakers the central bank has been able to deliver an economic soft-landing, bringing inflation down without a recession. He pointed to recent upward revisions to 2023 growth and a resilient labor market.

Changing Central Bank

During Lula’s initial two terms in office, the bank’s chief, Henrique Meirelles, said the president had given him de-facto autonomy to set monetary policy. But never since Brazil’s return to democracy had the nation’s president faced a central bank whose chief he hadn’t picked.

That has begun to change now.

Earlier this year, Lula appointed two names close to him to the central bank board, Gabriel Galipolo and Ailton Aquino. The move was the opening step in the bank’s first transition of power since the 2021 enactment of a law guaranteeing its formal autonomy.

Two more seats are set to open on the nine-member board in December. Then Campos Neto and two other directors will depart at the end of 2024.