This work aims to estimate the preferences of the Central Bank of Brazil during the inflation targeting regime, using a standard new keynesian model with forward-looking expectations, as proposed by Givens (2010). The presence of rational expectations in the model makes a distinction between two modes of optimization, commitment and discretion, and thus allows us to evaluate which of these specifications is favored by the data. Using quarterly data for the period from 2000-1 to 2010-4, the obtained results allow us to affirm that the data favor a discretionary policy. Estimates of the loss function show that the monetary authority gives great weight to inflation stabilization, followed by interest rate smoothing and stabilization of the output gap.
