{
  "title": "Brazil’s Ilan Goldfajn on Central Bank Communications – IMF F&D | DECEMBER 2019",
  "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2019/12/brazils-ilan-goldfajn-on-central-bank-communications-trenches",
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  "summary": "In an interview with F&D, former President of Brazil’s Central Bank Ilan Goldfajn discusses why central bankers ought to follow their convictions.",
  "sections": [
    {
      "heading": "Central message: conviction, regime adherence, and selective deviation from consensus",
      "content": "- Central bankers should follow their convictions and the guidance of their policy regime, even when this means going against markets, press, and analysts.\n- Examples:\n  - In mid-2016, during his first two weeks as governor, Goldfajn disagreed with widespread calls to adjust Brazil’s inflation-targeting regime despite high inflation perceptions; inflation in 2017 was 2.95 percent, below target.\n  - By 2018, despite rising U.S. interest rates and expectations that Brazil should raise rates, Brazil kept rates unchanged because the economy was recovering slowly and inflation remained low—another instance of resisting consensus.\n- Rationale: sticking to the framework and coordinated expectations can make challenging inflation targets achievable."
    },
    {
      "heading": "Transparency and communication practices",
      "content": "- Major changes implemented to increase transparency:\n  - Changed the monetary policy decision announcement and the minutes.\n  - Communicated in simpler, more concise, and straightforward language to clarify actions and conditionality.\n- Operational detail preserved:\n  - Monetary policy decision comes out on a Wednesday and the minutes on the following Tuesday morning.\n- Communication objectives:\n  - Influence and anchor inflation expectations by signaling what the central bank intends to do “depending on what would happen next.”\n  - Provide rationale so stakeholders understand decisions, not only the decisions themselves."
    },
    {
      "heading": "Institutional constraints, public scrutiny, and conduct",
      "content": "- Governance and personal conduct:\n  - Governors are under 24-hour scrutiny; public officials must be careful about public statements and use of public resources (examples: driver, plane).\n  - Public perception during crises extends to personal demeanor and behavior.\n- Implication: heightened transparency demands greater discipline in both public communication and private conduct."
    },
    {
      "heading": "Views on central-bank roles and mandates",
      "content": "- Crisis expectations and independence:\n  - Perception of central banks as powerful crisis-fighting tools increases political pressure to do more.\n  - Unconventional policies after the global financial crisis prompted political questioning in some advanced economies.\n- Dual mandate considerations:\n  - Central banks already consider inflation and growth trade-offs in the short term (stimulate in recessions, weigh trajectory toward target).\n  - Long-term growth determinants—productivity, education, investment—are largely outside central-bank mandate; central banks contribute through stability but cannot by themselves generate productivity growth."
    },
    {
      "heading": "Exchange rate policy stance",
      "content": "- Approach to exchange-rate pressures:\n  - There is a role for the central bank in dealing with disorderly market conditions and helping markets function better.\n  - Otherwise, allow the exchange rate to fluctuate in a way that reflects fundamentals and shocks.\n  - Policymakers must develop a framework to determine when to intervene and when to let the exchange rate reflect current economic reality."
    },
    {
      "heading": "Background and career highlights (contextual)",
      "content": "- Personal and professional context:\n  - Born in Israel; grew up in Rio de Janeiro during severe economic instability (four currency changes in seven years; inflation upward of 80 percent a month).\n  - Earned a PhD from the Massachusetts Institute of Technology.\n  - Worked with Asian countries at the IMF during the late 1990s.\n  - Deputy governor for economic policy at Brazil’s central bank in the early 2000s.\n  - Chief economist of Itaú Unibanco from 2009 to 2016.\n  - President of Brazil’s central bank from June 2016 to February 2019.\n  - Recently named Credit Suisse’s new chairman in Brazil.\n\nInterview with F&D’s Andreas Adriano, F&D Magazine, December 2019. Opinions expressed are those of the author and do not necessarily reflect IMF policy.\n\n---\n\n Content in this bundle\n\n- في خندق العمل\n  - في خندق العمل (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - في خندق العمل (PDF){rel=\"external\" type=\"application/pdf\"}\n- Brazil’s Ilan Goldfajn on Central Bank Communications – IMF F&D | DECEMBER 2019\n  - Brazil’s Ilan Goldfajn on Central Bank Communications – IMF F&D | DECEMBER 2019 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Brazil’s Ilan Goldfajn on Central Bank Communications – IMF F&D | DECEMBER 2019 (PDF){rel=\"external\" type=\"application/pdf\"}\n- En las trincheras: Ir contracorriente ● Finanzas y Desarrollo ● Diciembre de 2019\n  - En las trincheras: Ir contracorriente ● Finanzas y Desarrollo ● Diciembre de 2019 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - En las trincheras: Ir contracorriente ● Finanzas y Desarrollo ● Diciembre de 2019 (PDF){rel=\"external\" type=\"application/pdf\"}\n- À contre-courant\n  - À contre-courant (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - À contre-courant (PDF){rel=\"external\" type=\"application/pdf\"}\n- На передовой. Плыть против течения – Финансы и развитие – декабрь 2019 года\n  - На передовой. Плыть против течения – Финансы и развитие – декабрь 2019 года (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - На передовой. Плыть против течения – Финансы и развитие – декабрь 2019 года (PDF){rel=\"external\" type=\"application/pdf\"}\n- Brazil’s Ilan Goldfajn on Central Bank Communications – IMF F&D | DECEMBER 2019\n  - Brazil’s Ilan Goldfajn on Central Bank Communications – IMF F&D | DECEMBER 2019 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Brazil’s Ilan Goldfajn on Central Bank Communications – IMF F&D | DECEMBER 2019 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/fandd/issues/2019/12/brazils-ilan-goldfajn-on-central-bank-communications-trenches"
    }
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    "Published: December 1, 2019",
    "Central bankers should follow their convictions and the guidance of their policy regime, even when this means going against markets, press, and analysts.",
    "Examples:",
    "Rationale: sticking to the framework and coordinated expectations can make challenging inflation targets achievable.",
    "Major changes implemented to increase transparency:",
    "Operational detail preserved:",
    "Communication objectives:",
    "Governance and personal conduct:",
    "Implication: heightened transparency demands greater discipline in both public communication and private conduct.",
    "Crisis expectations and independence:",
    "Dual mandate considerations:",
    "Approach to exchange-rate pressures:",
    "Personal and professional context:",
    "**في خندق العمل**",
    "**Brazil’s Ilan Goldfajn on Central Bank Communications – IMF F&D | DECEMBER 2019**",
    "**En las trincheras: Ir contracorriente ● Finanzas y Desarrollo ● Diciembre de 2019**",
    "**À contre-courant**",
    "**На передовой. Плыть против течения – Финансы и развитие – декабрь 2019 года**",
    "**Brazil’s Ilan Goldfajn on Central Bank Communications – IMF F&D | DECEMBER 2019**"
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