IMF Working Papers

Real Interest Rate Targeting: An Example From Brazil

By Eric V. Clifton

December 1, 1990

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Format: Chicago

Eric V. Clifton "Real Interest Rate Targeting: An Example From Brazil", IMF Working Papers 1990, 111 (1990), accessed January 2, 2025, https://doi.org/10.5089/9781451945041.001

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines a real interest rate targeting procedure based on lagged inflation similar to the policy followed by the Brazilian monetary authorities during the period November 1986 to December 1988, focusing on the issue of the determinacy of the price level. For the specific model examined, the analysis suggests that such a targeting procedure would not suffer from the frequently noted defect of nominal interest rate targeting rules of leaving the conditional expectation of the next period price level undetermined.

Subject: Financial services, Inflation, Interest rate policy, Monetary policy, Prices, Real interest rates

Keywords: Government securities market, Inflation, Interest rate, Interest rate policy, Interest rate rule, Period price level, Policy rule, Real interest rate policy, Real interest rates, Target rule, Targeting procedure, WP

Publication Details

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