Inflation targeting in Brazil: Is the official target actually pursued?

Fábio Gomes () and Pedro Prado ()
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Fábio Gomes: FEARP/USP
Pedro Prado: FEARP/USP & IERI/UFU

Economics Bulletin, 2026, vol. 46, issue 3, 1127 - 1136

Abstract: This paper investigates whether the Brazilian Central Bank effectively pursues the midpoint of the official inflation target through the estimation of its implicit target using a time-varying parameter model from 2002Q1 to 2024Q4. The results indicate that the implicit target frequently exceeded the official midpoint, especially in 2005-2006 and 2013-2015. This pattern has important implications for central bank credibility and inflation expectations, as persistent deviations between formal targets and effective policy may increase uncertainty about future inflation and erode the anchoring role of the regime.

Keywords: Inflation targeting; Central Bank of Brazil; Implicit inflation target; Time-varying parameter model (search for similar items in EconPapers)
JEL-codes: E5 (search for similar items in EconPapers)
Date: 2026-09-30
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Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-26-00102

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