Central Bank of Brazil Inflation Report

The Inflation Report is published quarterly by the Central Bank of Brazil. This document analyzes the decisions of the previous meetings, the possible scenarios for future actions and a comprehensive assessment of the behavior of inflation.

The inflation report shows the policy guidelines adopted by the Monetary Policy Committee (COPOM), considering the recent evolution of the economic scenario and forecasts for inflation. Projections are presented within many conditioning variables in the Brazilian economic scenario. These projections are driven by the exchange rate and the rate of the Special Settlement and Custody System (Selic) over a given time. Usually, these expectations are reflected by the Focus Report, but scenarios with combinations of alternative variables are also presented. These scenarios are basically quantitative instruments to guide COPOM's monetary policy decisions.

The calculation of future expectations and forecasts of inflation does not depend on just the interest rate and the exchange rate, but also on a series of models and scenarios with external variables that are considered. The COPOM analyzes a variety of projections and scenarios, but with some associated restrictions, in order to guide its monetary policy decisions. By exposing some of these scenarios, the Committee seeks to foster transparency in its decisions, contributing to its effectiveness in controlling inflation, which is its main objective.

Negative projections of a national economic scenario, with prospects of rising inflation, may devalue the national currency, the Brazilian real.