Informal Inflation Target Was Not Attained

BRAZIL ECONOMICS - Report 13 Jan 2014 by Affonso Pastore, Cristina Pinotti and Marcelo Gazzano

In 2013 the Central Bank failed to meet the informal target of lower inflation than in 2012. In reality, without the government’s abusive use of price control measures, inflation for the year would have been above the upper limit of the target interval (6.5%). This was the fourth straight year that inflation measured by the IPCA significantly exceeded the central target of 4.5%, and in all this period the 12-month forward-looking expectations were above this level as well, with the present figure being around 6% (Graph 1), indicating progressive unanchoring of inflation.

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