CMN sets the inflation target for 2025 at 3%.

The National Monetary Council (CMN) has set the inflation target for 2025 at 3%, with a tolerance of 1.5 percentage points up or down. The announcement was made by the Ministry of Economy on Thursday (23).

The inflation targets for 2023 and 2024 were maintained, respectively, at 3.25% and 3%, also with a tolerance interval of 1.5 percentage points up or down. This is the value that the National Wide Consumer Price Index (IPCA) can reach in the coming years. In 2022, the inflation target also remains at 3.5%, with the same tolerance interval of 1.5 points.

History
Until 2016, the inflation target was set two years in advance, but a decree published in the Federal Official Gazette in June 2017 determined that the definition must now be made three years in advance. According to the Central Bank (BC), the change aimed to reduce uncertainty and improve the planning capacity of families, businesses and the government.

Since 2005, the center of the inflation target was 4.5%, with a 2.5 point margin of tolerance. In 2006, the interval fell to 2 points and remained this way in the following years, until it was reduced to 1.5 points for 2017 and 2018, a band that will now be maintained until 2025.

The inflation target must be pursued by the Central Bank when setting the basic interest rate, the Selic. When the Monetary Policy Committee (Copom) increases the Selic, it intends to contain heated demand and hold down prices by making credit more expensive and stimulating savings. When it lowers the basic interest rate, Copom cheapens credit, encouraging production and consumption.

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