This study asks whether the Brazilian exchange rate (R$/US$) survey forecasts are rational under flexible loss. For 2001--2011, the forecasts overpredict. The bias in shorter-horizon forecasts is due to an inefficient use of information, while the bias in longer-horizon forecasts seems to...

This study shows that the private sector accurately predicts short-term interest rate targets set by the Brazilian monetary authorities. With increased transparency under inflation targeting, such evidence suggests that the public perceives the central bank as credible.