The purpose of this paper is to discuss the role of communication in the conduct of monetary policy by the Brazilian Central Bank. Initially we build a glossary that translates the qualitative information contained in the minutes of COPOM into an ordered scale index, similar to the one built by Rosa and Verga (2005). We find evidence of a consistent behavior by COPOM, in the sense that its words are followed by actions in the same direction. Based on estimates of Taylor rules, we also find evidence that the index help to understand interest setting, justifying the central bank watching behavior.
