BRASILIA, Aug 25 (Reuters) - Brazil’s Supreme Court will debate on Wednesday whether a law to establish the autonomy of the central bank, insulating it from political interference, is constitutional or not. The law does not change the way the bank sets interest rates but distances it from politics by setting fixed four-year terms for its governor and directors that will no longer coincide with the presidential election cycle. Far-right President Jair Bolsonaro signed the measure into law here in February, but two left-wing parties have questioned whether it violates the country"s constitution. The court is expected to uphold the law"s constitutionality. Bolsonaro has reportedly regretted enacting the law as aggressive interest rate hikes to fight inflation threaten to hurt the economy next year, when he runs for re-election. The bank’s policymakers have also offered indirect criticism of his efforts to raise public spending to win votes. Central bank sources told Reuters they were aware the president was unhappy with the law, but said the bank had not faced any pressure from the president on policy autonomy. Bolsonaro’s office said he favors central bank autonomy. The monetary authority has already had de facto autonomy to implement policies deemed necessary to achieve its inflation-targeting goals, but the bank president has technically been a member of the Cabinet appointed by Brazil’s president. Under the new legislation, the bank’s president will no longer be part of the Cabinet. 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 say it will help foster economic stability, business confidence and private investment. Former central bank President Henrique Meirelles called it one of the most important institutional advances in recent years in Brazil, creating the independence needed for credible monetary authority. (Reporting by Marcela Ayres and Anthony Boadle Editing by Brad Haynes and Jonathan Oatis) Our Standards: The Thomson Reuters Trust Principles.