This chapter discusses the conduct of monetary policy in Brazil. It assesses the convergence of inflation and inflation expectations to the targets after the confidence crisis of 2002. The analysis covers the ensuing disinflation period and economic recovery, as well as the consolidation of disinflation in 2005-06. It is argued that the conduct of monetary policy and the overall improvement in macroeconomic fundamentals have contributed to creating a more stable, predictable macroeconomic environment, evidenced by a reduction in inflation uncertainty. The econometric evidence reported in the chapter underscores the critical role played by the inflation targets as “attractors” for expectations.