Berg: Positive experience of inflation targets in Brazil

"Brazil's first year with inflation targets was a positive experience. The Central Bank of Brazil publishes excellent inflation reports containing forecasts and uncertainty intervals for the future path of inflation. The minutes from monetary policy meetings also contribute to openness and enable evaluation of how monetary policy is being pursued."

 

These words were spoken on Monday by Claes Berg, Head of the Riksbank's Monetary Policy Department, at the "One Year of Inflation Targeting" conference held in Rio de Janerio and organised by the Central Bank of Brazil. He also said:

 

"After a crisis of confidence in the Brazilian real, a floating exchange rate was introduced at the beginning of last year. In June 1999, inflation targets of 6 per cent for 2000 and 4 per cent for 2001 with a tolerance interval of ± 2 per cent for both years were announced."

 

"The Brazilian economy has recovered faster than expected after the global financial crisis at the end of the 1990s. Inflation is also assessed to develop in the line with the target."

 

"There is currently a wide consensus that price stability should be the primary goal for monetary policy both in industrial nations and developing countries, or emerging markets as they are known. Inflation targets were first introduced in New Zealand, followed by countries including the UK and Sweden. In recent years, several developing countries, such as South Africa and Thailand, have been inspired to introduce a similar strategy. Inflation targets have been introduced in the Czech Republic and Poland. Consequently, other central banks have shown a large interest in the experiences of Riksbank," concluded Berg.