FGV’s Brazilian Institute of Economics (IBRE) held the Third Annual Seminar on Monetary Policy of 2017 on March 17 to discuss the fate of monetary policy in Brazil and the developed world. The seminar was divided into three sections, gathering scholars and professionals from financial institutions to discuss the subject. The first section addressed the past, present and future of the inflation targeting regime. The head of monetary studies at IBRE, José Júlio Senna, pointed out that Brazil still has some challenges to overcome in the future, such as the legal independence of the Central Bank (BC), the additional enhancement of technical training, and the need to come up with solutions for structural issues. Economist Sérgio Werlang stated that Brazil’s inherently institutional nature makes it difficult to restore balance in the event of tax offsets, which ultimately makes Brazil’s inflation targets slightly higher than those of countries with similar economic conditions.

Next, the event analyzed the future scenario of monetary policy worldwide. Eduardo Loyo, chief economist of Banco BTG Pactual, shared a comprehensive overview of the monetary policy in the U.S., the Eurozone, and Japan, detailing the differences and impacts in other global economies. José Julio Senna focused on the U.S. economy and the major macroeconomic transformations in the country, pointing out that the Fed will avoid running the risk of overdoing interest rate upsurges, considering the lackluster economic recovery in recent years.

The final panel discussed monetary policy in Brazil, moderated by Marcílio Marques Moreira, FGV board member and former Brazilian Minister of Treasury. Afonso Bevilaqua, professor at PUC-Rio, noted that Brazil might have a chance of reaching the interest rates forecast by the market at the end of the year if the Social Security Reform passes. In turn, Affonso Celso Pastore, founding partner of A. C. Pastore & Associados, said that the real interest rate is dropping and the neutral interest rate should also follow the same downward trend, which suggests a recovery in economic activity. Finally, Rodrigo Azevedo, partner at Ibiúna Investimentos, pointed out that the Central Bank of Brazil regained the market’s credibility after dragging inflation rates back to the target, raising medium-term expectations.

After the seminar, a cocktail party was held to launch the second volume of the book Essays and Conversations on Monetary Policy, by José Júlio Senna.