National Monetary Council to discuss lengthening inflation targets

“I have publicly defended the issue of the continuous target, and we will discuss it tomorrow at the meeting,” Haddad said this evening. He called the continuous goal model a “desirable improvement”.

Currently, the Central Bank pursues an inflation target established each year, with a tolerance margin of plus or minus 1.5 percentage points. In the continuous target system, used in several developed countries, the horizon can be open or obey a period greater than one year, such as 18 or 24 months.

In addition to discussing the lengthening of inflation targets, the CMN will set the inflation target for 2026. In its June meetings, the board sets the target for three years ahead, with the possibility of revising the targets for previous years.

“According to the agenda, the CMN will discuss the 2026 target. That is what we are dealing with”, he said. “And other questions like the one I’m asking. Whether or not it is the case to make this decision about standardizing Brazil’s inflation targeting program in relation to the rest of the world, which is sui generis”, he declared.

Currently, Brazil’s inflation target is set at 3.25% for 2023 and 3% for 2024 and 2025, with a tolerance margin of plus or minus 1.5 points. Haddad also informed that the CMN will also approve the measures of the Crop Plan 2023-2024 at this Thursday’s meeting.

With monthly meetings, the National Monetary Council is formed by Haddad; by the Minister of Planning, Simone Tebet; and by the president of the Central Bank (BC), Roberto Campos Neto. Generally, decisions take place by consensus, but, in case of disagreement, they are decided by majority vote.