LatinNews Daily - 27 June 2024

*Brazil’s President Luiz Inácio Lula da Silva has decreed the adoption of a new system for setting inflation targets, which will have a continuous target rather than a calendar-based target. The financial decision-making body Conselho Monetário Nacional (CMN), which is comprised of three members, the ministers for finance, Fernando Haddad, and for planning & budget, Simone Tebet, as well as the president of the central bank (BCB), Roberto Campos Neto, decided last year to adopt a new system. Under the previous system, the CMN would meet every year, normally in June, to set the BCB’s annual inflation target range for the following few years. However, under the new, more flexible system, which will take effect from the start of 2025, the CMN will set an inflation target range which will remain in place for at least 36 months. The three council members will no longer convene for one annual meeting. Instead, they will meet whenever they decide that the continuous target needs to be revised. Under the new system, if accumulated inflation for the rolling 12-month period falls outside of the agreed target range for six consecutive months, the BCB would be obliged to publish an open letter explaining why the target was missed.