the behavior of credit, interest rates, liquidity, fiscal and monetary policy, and exports have acted countercyclically, which combines with the recent improvement in the terms of trade. as a result, this has been the crisis with the shortest period of contraction and, therefore, with the most immediate recovery. the outlook for chile also compares favorably with that of many of its peers ( figure 13 ). page 7 of 19 however, it is important to recognize the characteristics, biases, and limitations of the recovery so far. while the initial covid - 19 shock affected the economy across the board, in the recovery there has been a high degree of heterogeneity between the sectors most affected by social distancing norms and those that were able to cope with the confinements or recover when they were eased. on the demand side, there is a large gap between private consumption, driven by transfers and massive withdrawals of pension savings, and investment, more influenced by the financial situation of companies and uncertainty. in this context, the recovery is being accompanied by local price pressures, latent risks insolvencies and a precarious recovery in employment. in other words, this is a still very unbalanced recovery, with frictions, mismatches, bottlenecks, and important risks, all of which may jeopardizes not only the speed of the recovery, but also our ability to resume growth at a close to trend rate over a longer term. this issue matters considering that, compared to our september 2019 estimates, the damaged caused by the social crisis and the covid - 19 crisis combined will add up to a loss of almost 10 % of gdp by 2022 ( figure 14 ). this is complemented with the fact that these two crises combined have caused dismay among the economic agents, whose equity position has worsened as they have used up their slack and reserves. thus, from september 2019 and through this year to date, companies increased their indebtedness by 16 points of gdp ; the capitalization of the stock market fell by nearly 25 points of gdp ; the government has used its sovereign wealth funds and issued new debt to raise it in net terms by almost 8 points of gdp, and households will have reduced their pension savings by about 10 points of gdp when the second withdrawal of funds is completed. all of this makes these agents more vulnerable to future stressful scenarios. the impact of these factors is already apparent in our economy. our currency, for example

monetary policy report presentation before the honorable senate of the republic mario marcel governor central bank of chile 6 september 2017 the monetary policy report of september 2017 can be downloaded from http : / / www. bcentral. cl / en. [ inf * res * as ] introduction mr. president of the senate, senator andres zaldivar, honorable senators, ladies, gentlemen, thank you for inviting the board of the central bank of chile to present our september monetary policy report. as is the case every september, its publication coincides with the annual report that, as provided for in the cbc ’ s organic law, we must submit to the senate. the report i will be summarizing for you now depicts the board ’ s vision about the recent macroeconomic and financial developments in chile and the world, together with prospects and implications for the conduct of monetary policy. it also includes the cbc ’ s financial results for the first half of the year, plus the results of international reserves management and a summary of the main decisions adopted by the board this year to date. this presentation will describe two additions to the traditional report, namely an analysis of the determinants of trend gdp in chile — as a supplement to the report — and some refinements that the board has decided to apply to the monetary policy process, summarized in a box alongside the main text. with these additions, we reaffirm the board's decision to not only disclose rigorously how the institution is managed, but also use its autonomy to improve the quality and transparency of its processes beyond what it is strictly required by law. the monetary policy report in recent months, inflation and growth were below the estimates in the june report. however, the main differences were related to factors that we consider to be transitory, in particular supply - side factors that affected the performance of activity and the level of certain prices. for this reason, neither the outlook for the economy for the next two years nor the general orientation of monetary policy, differs much from the projections contained in it. in the baseline scenario i will examine in a moment, core inflation — the cpiefe — will gradually return to 3 % as from mid - 2018, after several months around 2 %, while headline inflation will rise somewhat faster, as prices of its most volatile components return to their historical patterns and market expectations about the world prices of fuel and foodstuffs are confirmed. we expect gdp growth to pick up beginning in the second half of this year. with this,