July 14, 2024

the Finance Ministry is considering the changes; Learn what can change – Money Times

2 min read
the Finance Ministry is considering the changes;  Learn what can change – Money Times
the Finance Ministry is considering the changes;  Learn what can change – Money Times
The model the Treasury is advocating is a sustained inflation target, which mainly extends beyond 12 months (Photo: EDU ANDRADE/Ascom/MF)

target topic economic inflation Take back the lights. This is because at the June meeting the National Monetary Board (CMN(sets a target for the Expanded Consumer Price Index)IPCA) the next three calendar years.

At the beginning of the year, sir Luiz Inacio Lula da Silva He began to criticize the inflation target, claiming that it was too low and that it would hinder a rate cut Silic. in season, Lola Instructed to reduce the tug of war on this and Ministry of Finance Take responsibility for discussing goals.

According to information from economic value, the economic team is studying a way to make the goal system more flexible. The idea is that the government adopts a longer period of time to achieve the goal. That is, the rule that is based on the calendar year must be replaced.

Currently, targets are set year by year, with inflation targets for 2023, 2024, and 2025 being 3.25%, 3%, and 3%, respectively.

The model the Treasury Department is advocating is a continuous inflation target, which essentially extends beyond 12 months. The reason for the change is that the effects of monetary policy tend to kick in, on average, after 18 months – and the government wants to align the target with that time window.

last week, Fernando Haddad I was already stuck at the end of the calendar year in goal setting. he said in an interview with CNN.

It is worth noting that it is not yet clear whether the government also intends to increase the target percentage.

to Ettore Sanchez, Chief Economist Activate investments, Improving the inflation targeting system is essential. However, the debate cannot be conducted in a hasty manner or with the aim of monetary mitigation.

“A revision of the target on the relevant horizon (2024), in my opinion, will only serve to broaden the inflationary process we are witnessing and BC’s need to combat it through interest rates,” he says.

Juliana Amerko holds a degree in Journalism from PUC-SP, with a major in International Journalism. She is an editor at Money Times and has worked in newsrooms for InfoMoney, Você S/A, Você RH, Olhar Digital and Editora Trip.

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