The interest rate is set by the central bank with a view to securing a nominal anchor for the economy in the long term. The setting of interest rates is based on evaluations of economic trends and the balance of risks. In some periods, the assessment of economic prospects and the balance of...

Setting the interest rate in an inflation targeting regime requires a total assessment, often translated into forecasts, of the outlook for inflation and real activity. In the assessment process, it is useful to have some references or cross-checks, in terms of simple rules. Although simple...