On the one hand, the recovery of developed economies goes on, but only moderately and insufficiently to reduce the high rates of unemployment (figure 1). Risks are substantial. In fact, the intensity and velocity of the events we saw in Europe in early November are proof of the fragility of the world economy. On the other hand, growth prospects in emerging markets are still positive; commodity prices are still high, with copper standing out recently at record highs, and external financing conditions are good. The sustainability of this imbalanced scenario for the global economy is one of the primary risk factors for next year. Some of the questions we must try to answer and monitor closely are: How fast can emerging economies grow if the advanced economies are further weakened? How can advanced economies grow without incurring in unsustainable current-account deficits? How will the financial tensions in Europe be resolved? Is it possible for expenditure in Chile to grow excessively while ignoring the risks coming from abroad? In this context, the Board has continued to gradually normalize the monetary policy interest rate (MPR), setting it at 3.25% in its December meeting. In the most likely scenario, it will continue to gradually withdraw the monetary stimulus, which will depend on the unfolding of internal and external macroeconomic conditions. Let me now take a closer look at the scenario we believe is the most likely for the next two years and its implications for inflation and monetary policy. Macroeconomic scenario I will begin with the world economy.

Massive injections and the enabling of mechanisms to supply liquidity in different currencies were pivotal in containing the risk of such collapse. These measures were accompanied by official interest rate cuts that contributed to generating the necessary demand stimuli to counter, as far as possible, the adverse effects of the crisis on activity and employment. In the initial stages of the crisis, the measures of the Federal Reserve, the Bank of England, the Bank of Japan and the European Central Bank essentially followed a common pattern. The differences between them had, above all, to do with the singular characteristics of their respective operational frameworks. Subsequently, differences have become apparent between the paths pursued. While cyclical positions continued relatively to coincide, the emerging divergences were linked to the specific structural features of the different economies, such as, for instance, the different weights of banks and capital markets in the intermediation of financial flows. Later, however, differentiation was increasingly more related to the differing pace of exit from the crisis in each economic and monetary area. The monetary policy of the US Federal Reserve Since the start of the crisis, the US Federal Reserve has been pursuing a strongly expansionary monetary policy. In this connection it has resorted to a wide array of both conventional and less conventional measures. The Federal Reserve cut its official interest rates successively until placing them at their natural lower bound, i.e. close to zero, and it embarked on massive securities purchase programmes that substantially expanded its balance sheet.