12 13 14 jun. 2012 report 07 08 09 10 11 12 13 14 sep. 2012 report ( 1 ) gray area, as from third quarter of 2012, shows forecast. ( 2 ) consumer price index excluding foodstuffs and energy. sources : central bank of chile and national statistics institute ( ine ). bis central bankers ’ speeches table 1 international baseline scenario assumptions 2011 ( e ) 2012 ( f ) report report mar. 12 jun. 12 growth report sep. 12 2013 ( f ) report report mar. 12 jun. 12 2014 ( f ) report report sep. 12 sep. 12 ( annual change, percent ) trading partners world at ppp 4. 1 3. 8 3. 8 3. 3 3. 6 3. 2 3. 5 3. 1 4. 2 3. 9 3. 9 3. 6 3. 8 3. 6 4. 3 4. 1 united states eurozone japan china india rest of asia ( excl. japan, china & india ) latin america ( excl. chile ) 1. 8 1. 5 - 0. 8 9. 2 6. 5 4. 2 4. 4 2. 1 - 0. 3 2. 0 8. 1 7. 3 4. 3 3. 6 2. 0 - 0. 6 2. 7 7. 9 6. 5 3. 9 3. 3 2. 2 - 0. 4 2. 7 7. 8 5. 8 3. 5 3. 0 2. 3 1. 0 1. 6 8. 5 7. 9 4. 8 4. 0 2. 0 0. 3 1. 3 8. 2 7. 2 4. 6 3. 7 2. 0 0. 3 1. 3 8. 1 7. 1 4. 5 3. 4 2. 4 1. 7 1. 4 8. 3 7. 3 4. 8 3. 9 lme copper price ( us $ cent / lb ) brent oil price ( us $ / barrel ) ( levels ) terms of trade 0. 5 - 5. 3 - 6. 9 - 2. 6 1. 3 ( annual change, percent ) - 7. 4 - 0. 1 - 1. 5 ( e ) estimate. ( f ) forecast. sources : central bank of chile based on a sample of investment banks, consensus forecasts, international monetary fund and statistics bureau of respective country. bis central bankers ’ speeches

##aligned from fundamentals, the intervention may be successful in realigning the currency. if not, sterilized intervention will most likely be ineffective, and for this reason is important to have a strong presumption that the currency has moved away from fundamentals before intervening. 3 in addition, foreign exchange intervention allows authorities to increase the international liquidity position of the economy so as to insure against a future curtailment of capital inflows. naturally, a booming economy, with a widening current account deficit, persistent appreciation and low inflation may need some stabilization if the expansion is deemed to be unsustainable. fiscal policy could help, but unfortunately it is not always available, especially in countries with a weak fiscal history. another tool, with weak evidence supporting its for further discussion on the use of monetary policy to affect asset prices, in particular in the context of inflation targeting in open economies, see de gregorio ( 2010b ). in economies following inflation targets is important that the intervention be coherent with the inflation outlook to avoid undermining credibility. intervention can also be part of unconventional policies to reach the inflation target when interest rates are close to the zero lower bound. effectiveness, is capital controls. 4 regardless of whether they are effective or not, they may hide policy distortions. for example, policymakers thinking that capital controls are effective at insulating the economy from capital inflows, may tighten monetary policy to slowdown the expansion, but instead induce further inflows that look for loopholes to avoid the controls. for this reason i think that a more promising avenue is to look at the impact of capital inflows on financial stability. indeed, many of the booms in asset prices and activity that come with capital inflows are caused and amplified in the financial system. capital inflows and financial stability from the macro point of view, i have emphasized currency risks associated to capital inflows. a flexible exchange rate should help mitigate this risk. in addition, the development of the foreign exchange derivatives market should allow private agents to hedge against currency risk. in addition, capital inflows may be behind the development of bubbles in domestic asset prices, and there are also macro tools to deal with them. however, there are other risks that must be considered, which have implications on macro prudential regulation. note that these risks may be relevant even when net capital flows are limited. therefore, from the standpoint of financial stability, gross flows become