Latin America has one of the highest interest margins in the world; furthermore, credit to private sector and bank spread are negatively correlated. Brazil, in particular, has one the highest bank spreads in the world - it is even so far the highest one among the Latin American economies. Indeed,...

The purpose of this paper is to examine the Inflation Targeting (IT) framework as it is applied in the case of Brazil since its adoption in June 1999. For this purpose we first summarize the macroeconometric model utilized by the Central Bank of Brazil (BCB) in its pursuit of the IT framework....