SAO PAULO (Reuters) -Brazilian President Luiz Inacio Lula da Silva signed a decree on Wednesday establishing a continuous inflation target starting in 2025, with quarterly accountability by the central bank.

According to the decree, starting in January, the target will be considered missed if annual inflation deviates for six consecutive months from the range of the respective tolerance interval.

In such cases, the central bank will issue an open letter to the finance minister explaining the reasons, necessary measures to bring inflation back to target, and the expected timeline for their effectiveness.

The decree said the target will be set by Brazil's National Monetary Council (CMN), the country's top economic policy body.

Currently, the CMN sets annual inflation targets that must be met each calendar year. The official goal was set at 3% from 2024 to 2026, with a tolerance range of plus or minus 1.5 percentage points. The CMN is scheduled to meet on Wednesday.

Earlier on Wednesday, Lula informed the news outlet UOL in an interview that the government decided to maintain the current inflation target. The novelty was the establishment of the continuous timeframe, he said.

The decree also mandates the central bank to begin publishing a quarterly monetary policy report, "which will include the performance of the new inflation target framework, the results of past monetary policy decisions, and the prospective assessment of inflation."

The change in the timeframe to assess the inflation goal's fulfillment was announced a year ago, but it hinged on the presidential decree.

Finance Minister Fernando Haddad, who is part of the CMN along with the planning minister and the central bank governor, advocates for pursuing inflation targets within a "continuous" timeframe, arguing that a longer-term approach provides more room to accommodate price shocks without requiring monetary tightening.

During the interview earlier on Wednesday, Lula said that the central bank director of monetary policy, Gabriel Galipolo, met with him on Tuesday to discuss the inflation target.

When asked if Galipolo would be chosen to head the central bank once Roberto Campos Neto's term as governor ends in December, he said he is not yet focusing on the matter.

"Galipolo is a highly prepared fellow who knows a lot about the financial system. But I'm not thinking about the central bank issue yet. The time will come when I will consider it and appoint a name," he said.

Now in his third non-consecutive term, Lula said the central bank's autonomy has always been respected in his previous administrations, but reiterated criticism of the current benchmark interest rate of 10.5% given the annual inflation rate of 4%.

Brazil's real extended its drop against the U.S. dollar to 1% amid Lula's remarks, weakening past 5.50 per greenback in spot trading.

(Reporting by Peter Frontini; Editing by Gabriel Araujo and Alistair Bell)