Asymmetric transmission of monetary policy on disaggregated inflation: lessons from Brazil

Rafael S. M. Ribeiro (), Gilberto Lima, Gustavo Pereira Serra and Marina Sanches ()

No 2024_24, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: This article examines the impact of restrictive monetary policy, specifically an increase in the benchmark interest rate (Selic), on inflation rates across different consumption groups in Brazil, as measured by the Extended National Consumer Price Index (IPCA). The Central Bank of Brazil uses the Selic rate to align inflation with its target. The study uses the Local Projections model on data from January 2007 to December 2023 to analyze how inflation in various groups and subgroups responds to changes in the Selic rate. Findings indicate that an increase in the Selic rate reduces inflation in groups like “Food and beverages†, “Household items†, and “Clothing†, but has little effect on “Housing†and “Communication†. This research highlights the need for tailored economic policies for different consumption segments, illustrated by a case during the COVID-19 pandemic.

Keywords: Monetary policy; Selic rate; disaggregated inflation; Local Projections model (search for similar items in EconPapers)
JEL-codes: C32 E31 E52 E58 (search for similar items in EconPapers)
Date: 2024-10-21
New Economics Papers: this item is included in nep-ban, nep-cba and nep-mon
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