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CEPAL Review

Cepal Review is the leading journal for the study of economic and social development issues in Latin America and the Caribbean. Edited by the Economic Commission for Latin America, each issue focuses on economic trends, industrialization, income distribution, technological development and monetary systems, as well as the implementation of economic reform and transfer of technology. Written in English and Spanish (Revista de la Cepal), each tri-annual issue offers approximately 12 studies and essays undertaken by authoritative experts or gathered from conference proceedings.

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Financial market reaction to central bank monetary policy communications under an inflation-targeting regime: the case of Brazil

Central bank communications are important for guiding expectations. For emerging countries, however, research on this issue is scarce. Because Brazil represents an important emerging country under inflation targeting, this paper studies the influence of monetary policy and central bank communications on the term structure of interest rates in Brazil. The study uses ordinary least squares (ols), generalized method of moments (gmm) and vector autoregresion (var) to examine the direction taken by interest rates when affected by central bank communications and monetary policy. The study finds evidence that because economic agents analyse the minutes of the Monetary Policy Committee meetings, monetary policy and central bank communications significantly influence the process of expectations formation for interest rates with different maturities in Brazil.

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