This paper estimates Central Bank's preferences for the period between 2002 and 2013. Therefore, we analyze a Central Bank optimization problem within an open economy. The Euler equation that solves this problem allows to apply the generalized method of moments (GMM) to efficiently estimate the parameters. Such an approach dissociates the preference's parameters from those related to the structural conditions of Brazilian economy, unlike what occurs on direct estimations of a monetary policy rule. The results indicate a high degree of flexibility in Brazil's inflation targeting regime, suggesting that output stabilization around its potential is a significant goal in monetary policy decisions, over a strict inflation control. This flexible nature of the monetary policy management seems to have been deepened over the administration of President Alexandre Tombini.
interest rate rules; inflation targeting; Central Bank Preferences
