Necessary but Not Sufficient: What Five Years of Central Bank Autonomy Reveal About Brazil's Macroeconomic Governance

This paper evaluates the effects of Brazil's Complementary Law 179 (2021), which granted formal operational autonomy to the Banco Central do Brasil, five years after its enactment. Analyzing macroeconomic data from 2021 to 2025, the paper argues that the reform represented a meaningful institutional advance — reducing the Bank's vulnerability to short-term political interference and enabling the Monetary Policy Committee (Copom) to execute one of the most aggressive tightening cycles in Brazilian history without yielding to electoral pressure. GDP growth remained positive throughout the period (ranging from 2.3% to 4.6% annually), while unemployment fell from pandemic-era highs to a historic low of 5.6% in 2025, weakening the claim that monetary discipline necessarily produces lasting labor market damage. However, the reform did not eliminate inflation target breaches, nor did it resolve Brazil's structurally elevated real interest rates. The paper contends that these shortcomings reflect not a failure of central bank independence, but the absence of complementary fiscal discipline and policy coordination between the Ministry of Finance and the monetary authority. The central argument is that institutional autonomy is a necessary but insufficient condition for macroeconomic stability: durable results require a coherent policy ecosystem, not a single institutional fix.