Inflation Targeting in Brazil: Reviewing Two Years of Monetary Policy 1999/00

Pedro Fachada

No 25, Working Papers Series from Central Bank of Brazil, Research Department

Abstract: In July 1999, Brazil implemented a formal inflation-targeting framework for monetary policy, less than six months after moving to a floating exchange rate regime. This work evaluates the initial years of the Brazilian experience with inflation targeting. During the period the inflation rate remained in the targeted range, despite the several external and domestic adverse shocks that hit the Brazilian economy. The new monetary framework proved to be fundamental to enhance transparency and to guide expectations, thus preventing transitory inflation surges to develop into permanent inflation increases.

Date: 2001-06
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