by José de Castro
SAO PAULO (Reuters) – The National Monetary Council (CMN) set this Thursday the inflation target measured by the IPCA for 2024 at 3.00%, with a tolerance margin of 1.50 percentage points, more or less.
The CMN also confirmed the targets of 3.75% for 2021, 3.50% for 2022 and 3.25% for 2023.
The CMN is a collegiate body chaired by the Minister of Economy, Paulo Guedes, and composed of the President of the Central Bank, Roberto Campos, and the Special Secretary for Finance of the Ministry of Economy, Bruno Funchal.
“The CMN assesses that setting the inflation target for 2024 at 3.00% reduces uncertainties and increases the planning capacity of families, companies and the government,” said a press release sent by the Ministry of Economy. “The 0.25 percentage point reduction compared to the 2023 target is consistent with the high credibility of monetary policy.”
According to the text, the expectation of future inflation, projected in the Focus Bulletin, proved to be anchored to the trajectory of reductions in the previous target, and the variance of inflation expectations has substantially decreased with the reductions in the target.
“Such evidence reveals that the monetary policy and targets are credible, which eliminates the possible costs of reducing their percentages.”
In the note, the Ministry of Economy assessed that the process of fiscal consolidation of the economy creates a favorable environment for a structural reduction in inflation and equilibrium interest rates.
For the ministry, measures such as the spending ceiling and the Social Security reform produced expectations of a reduction in the spending trajectory, while the Emergency PEC, which established triggers for the adjustment of spending by the Union, States and municipalities, was added to the approval of others complementary laws that reinforce the fiscal balance of federative entities.
“Even in the face of adverse shocks, the government’s commitment to intertemporal fiscal balance, reflected in the maintenance of the ceiling, maintains a favorable environment for macroeconomic stability,” said Economy in the text sent to the press.
The ministry considered in the note that inflation brings substantial costs to society, reducing real income from capital and labor, and, therefore, discourages productive activity. Furthermore, it creates an environment of allocative inefficiency, since it changes relative prices in a non-structural way.
“The reduction of the target produces, therefore, a stable and predictable environment, stimulating investment and production and increasing the well-being of Brazilian society”, concluded the folder.
The CMN post sets the 2024 inflation target at 3.00%, with a margin of 1.5 pp, which appeared first in ISTOÉ DINHEIRO.