06/26/2024 – 17:42
The terms of the decree establishing the continuous inflation target were negotiated with the entire economic area, including the Central Bank, Finance Minister Fernando Haddad said this Wednesday, confirming that the target will remain at 3%, with the same band tolerance of 1.5 percentage points.
+ Understand what changes with the continuous inflation target decree from 2025
In a statement to the press after a meeting of the National Monetary Council (CMN), Haddad stated that the decree exempts the collegiate from setting new inflation targets frequently.
Haddad also said he saw no sign of apprehension regarding the commitment of the government and the BC in relation to meeting the targets, highlighting that setting a target other than 3% was not discussed.
President Luiz Inácio Lula da Silva issued a decree this Wednesday that formalizes the adoption of a continuous inflation target from 2025 onwards, providing that the Central Bank must explain itself to the government if the target is missed for six consecutive months.
In the interview, the minister said that the BC’s director of Monetary Policy, Gabriel Galípolo, met with Lula this week to clarify points of the decree, having been authorized by the president of the agency, Roberto Campos Neto.
For the minister, the great advantage of the continuous target system is that it will be up to the BC to offer a work plan to bring inflation within the target band.
Regarding the fiscal framework, Haddad said that “possibly” 2024 will have the best primary result in 10 years.
“Uncertainties”
Adjustments to the inflation targeting regime, implemented in the new continuous targeting system, should reduce uncertainties and allow inflation expectations to be anchored over longer horizons, the Ministry of Finance stated this Wednesday in a note.
The ministry said that the decision to maintain the 3.0% target, similar to the level practiced in other emerging countries, strengthens the perception of Brazil’s commitment to low and stable inflation.
“The continuous verification of the target and the need for accountability by the monetary authority add credibility to the new inflation target system,” he said.
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