Minister of Finance says that the ideal is to define targets to be achieved throughout the year, but the change should only occur in July.| Photo: Washington Costa/Ministry of Finance

Finance Minister Fernando Haddad criticized the inflation target system in force in Brazil, which calculates the index year by year, and defended the adoption of a continuous target. The change in the mechanism was signaled by him at the beginning of last month after a meeting with the president of the Central Bank, Roberto Campos Neto, but a new definition should only be taken at the meeting of the National Monetary Council (CMN) in July.

“Brazil and Turkey are the only countries that adopt a target regime with a specificity that, in my opinion, makes no sense, which is the calendar year”, said the minister in an interview with CNN Brasil this Thursday (18) .

According to Haddad, the ideal scenario is to define targets that must be pursued throughout the year or over longer horizons, and not as rigid as in the current Brazilian system.

“You analyze the country’s economy, set a goal and don’t fix the calendar year. Some call it continuous goal i.e. if it is 3 [%]chases 3 [%]. The scheme, in my opinion, has worked. I think there is this improvement to be made and, perhaps, the opportunity is now”, he added.

The current inflation target in Brazil is 3.25% with a tolerance interval of 1.5 percentage points.