While the Chilean economy has refined its economic policy framework to make it more resilient to external shocks, and both the funding of the current account deficit and the destination of its resources mitigate these risks, it is essential to prevent the incubation of imbalances. The opposing forces facing monetary policy remain. Some external risks have eased, but the European situation is delicate. Inflationary risks in the medium term remain in place due to strong demand. The MPR is within an estimated neutral range, but its current level is high by international standards. (figure 8). Interest rate differentials with the developed world pose challenges for policy making in emerging economies, including Chile. The Board follows closely the evolution of the external and internal macroeconomic scenarios and their impact on inflation, and reiterates its commitment to conduct monetary policy so that projected inflation stands at 3% over the policy horizon. Allow me some final thoughts. BIS central bankers’ speeches  5  Final remarks The Chilean economy has made great progress in the past several decades. The improvements to our economic and financial policy regimes, together with an external environment that has been relatively favorable for our country – particularly the price of copper, which owes in turn to the strength of the Chinese economy – permitted us to successfully weather the worst international crisis of the last sixty years. We healed quickly and today we are close to full employment, with personal income growing steadily and low inflation.

Fears of a pronounced slowdown in China have eased, and indicators point to a stabilization of output. Other emerging Asian economies are also signaling an improvement. In Latin America, the strong growth of Peru contrasts with the deceleration in Colombia and slow growth in Brazil and Argentina. The growth rates of other developed economies and commodity exporters have been affected by fiscal processes and lower prices of some of their exports, simultaneously with high current-account deficits. From December, the baseline scenario of this Report corrects the growth projection for our trading partners upward to an average of 3.9% in the forecast horizon, the first upward revision in over a year. Global financial conditions have improved in recent months, partly reflecting a perception of lower probability of occurrence of extreme scenarios, particularly in the U.S., after learning that only some of the drastic fiscal adjustments previously approved will take effect. The greater confidence was reflected in greater preference for variable-income assets in developed economies, where long-term interest rates and stock prices have risen. The U.S. dollar has appreciated since December, mainly against the yen, reflecting expectations of a more expansionary monetary policy in Japan. Most of the currencies of emerging economies, including the Chilean peso, have appreciated against the dollar in the same time span. BIS central bankers’ speeches  3  The gasoline price has risen substantially this year so far, largely because of supply-side factors. This results in an upward revision of its forecast for this year and next.