, deregulation, financial innovation, and other factors have led to recurrent instability in the relationships between various monetary aggregates and other nominal variables. ” 3 still, my colleagues and i will be monitoring a wide range of financial and economic developments very closely – including the growth of the money supply, inflation, and many other financial and nonfinancial variables – and, based on a full assessment of those developments, the fomc will withdraw monetary accommodation at the appropriate time. my view is that the elevated reserve balances would be inflationary only if they prevented the fomc from effectively removing monetary accommodation by raising interest rates when the time comes to remove such accommodation, and i am convinced that that will not be the case. the fomc has a number of tools at its disposal for raising interest rates. when appropriate, the federal reserve can put upward pressure on interest rates by raising the rate it pays on see ben s. bernanke ( 2006 ), “ monetary aggregates and monetary policy at the federal reserve : a historical perspective, ” speech delivered at the fourth ecb central banking conference, frankfurt, germany, november 10, www. federalreserve. gov / newsevents / speech / bernanke20061110a. htm. bis central bankers ’ speeches reserve balances. moreover, we have developed new tools that will allow us to drain reserves if necessary. in particular, we can drain large volumes of reserves by replacing them with repurchase agreements and term deposits. finally, we can always sell the securities we purchased. such sales would not only drain reserves but would also put direct upward pressure on longer - term rates. conclusion overall, the recovery in economic activity to date has been uneven and has not been sufficient to reduce unemployment noticeably. but i am encouraged by signs that the recovery may have gained traction recently. and i believe that sustained gains in consumer spending and business investment and a further easing of credit conditions will reinforce each other, leading to greater confidence and improving the prospects for an extended expansion that, over time, will reduce unemployment to a level consistent with full employment. at the same time, i anticipate that inflation will remain subdued. finally, i believe that the actions taken by the fomc to support the economic recovery are appropriate, and i am confident in our commitment to monitor economic conditions and take action as needed. bis central bankers ’ speeches

% in two years. higher inflation is very costly for everyone. the global economic outlook has turned more difficult since early march. for the chilean economy, this will imply facing lower external demand and tighter global financial conditions. overall, the current scenario is associated with a higher degree of uncertainty than usual. on the one hand, there is the risk of a sharper deterioration of the external scenario, with more profound implications for chile. on the other hand, the slow decline in domestic consumption could result in a more complex inflationary dynamic. as we noted in our statement after yesterday's meeting, we believe that the mpr will need to be maintained at 11. 25 percent until the state of the macroeconomy signals that the process of inflation convergence to the 3 % target has been consolidated. according to the central scenario of the mp report, which i will present to you shortly, this will take longer than we anticipated in december. inflation has been high for a long time now, which increases the risks of scenarios where it continues to push its decline back. the central bank will not relent in its effort to bring it to target and we will act flexibly in case any of the internal or external risks materializes and macroeconomic conditions so require. let me now walk you through the contents of the report. macroeconomic scenario and projections as i just said, annual inflation is stuck at very high levels. last february, the annual variation of the cpi stood at 11. 9 percent, a figure that, while down from its peak in the third quarter of 2022, is still well above the target defined by the bank. february ’ s monthly variation was negative — at 0. 1 percent — for the first time in several quarters. however, it responded mainly to a drop in volatile prices. as a matter of fact, the core component of the cpi posted a considerable rise in that month ( + 0. 7 percent ) ( figure 1 ). it is worth noting that the annual variation core cpi has hovered around 11 percent for several months now, despite the fact that most inflation fundamentals have been easing. while the chilean peso has appreciated around 11. 5 percent with respect to the statistical close of the december report, global cost pressures have decreased. the prices of commodities, including copper, have dropped, supply chains have normalized and transportation costs have fallen too. all in a context in which monetary policy has maintained a clearly contractionary stance ( figure 2 ). in addition, compared to