the fed funds rate at the minimum level where it is today, which reflects the magnitude of the problem. meanwhile, information from china reveals its economy is growing strongly. it also shows a relief of inflationary pressures in that country, providing more space for policy - making. the prices of commodities, especially copper, have recovered significantly in the past few weeks. actually, today ’ s price of this metal is substantially higher than we had forecast for the year. the baseline scenario in our december monetary policy report is still totally valid. our aforementioned report and the market expect a moderate deceleration of chile ’ s growth. our economy is forecast to grow in the range of 3. 75 % to 4. 75 % in 2012, with y - o - y rates for every expenditure component below those of 2011. this would be the response both to a normal, sound convergence of the economy to trend - consistent growth rates, and to the effects of a less favorable external environment. the latest data show our economy gradually adjusting to lower growth rates, at the same time that expenditure indicators are still showing substantial growth. sure enough, there are differences across sectors. in some branches of manufacturing, especially export - oriented ones, dynamism is milder. in other sectors, such as retail, there is some degree of higher bis central bankers ’ speeches caution in inventory management. by contrast, the consumption of durable and capital goods, which are normally the first to react to a change in the agents ’ expectations, remains strong, the same as the construction sector. meanwhile, various indicators signal a tight labor market. it has been recently reported that in december, the unemployment rate as measured by the universidad de chile survey for greater santiago dropped to a 15 - year low, and that the creation of new jobs has, for the most part, been accounted for by salaried employment. turning to the debt burden of households and firms, as we noted in our financial stability report of the second half of last year, the financial indicators of the corporate sector look favorable, with a stable and limited currency mismatch. the household average shows no financial deterioration because the increase in private consumption has been accompanied by an increase in labor income. however, households as well as firms must keep a watchful attitude facing possible risk scenarios. as for banks, the sector has adequate capital levels to absorb the materialization of a severe risk scenario. as shown in our last financial stability report, stress tests indicate that the banking system ’ s current

on global financial markets warrant attention, and geopolitical risks also could exert downward pressure on economic activity. the bank will continue to pay close attention to both upside and downside risks. ii. price developments and their outlook price developments now, i will move on to price developments. prices in japan have been increasing gradually, mainly on the back of a rise in energy prices. the year - on - year rate of increase in the consumer price index ( cpi ) excluding fresh food has accelerated to 0. 8 percent this october, rising by more than 1 percentage point in a year from the rate of change of minus 0. 4 percent registered in october last year ( chart 6 ). excluding the effects of energy prices, however, the rate of change in the cpi has remained slightly positive. thus, price developments in japan are still relatively weak despite continuing economic expansion and the tightened labor market conditions. somewhat strong economic activity and relatively weak prices, which seem contrary to each other at first glance, are coexisting in japan. this situation is also observed in other advanced economies recently. the inflation rates in the united states and the euro area have remained below the central banks'target levels despite the firm improvement in the global economy that i mentioned at the outset. federal reserve chair janet yellen described the recent sluggish price developments in the united states as a " mystery, " while referring to the possibility that such developments are mainly due to transitory factors such as a decline in telecommunication service prices. the chair pointed out that the outlook is subject to considerable uncertainty from multiple sources. specifically, in addition to uncertainties regarding the supply capacity in the labor market and medium - to long - term inflation expectations, the chair mentioned the possibility that factors such as increasing competition with emerging economies, reflecting globalization, and a rapid spread of the use of online shopping backed by advances in technology could affect price developments. it may be very beneficial for japan as well to consider these points when analyzing its price developments. however, it also should be kept in mind that the inflation rates in the united states and the euro area have been at around 1. 5 percent despite being regarded as somewhat weak, and that such situation is somewhat different from that in japan. therefore, it is natural to think that low inflation in japan also is attributable to factors that are unique to japan. the background to relatively weak price developments and their outlook i will elaborate on the relationship between economic activity and prices in japan. taking into account that