vittorio corbo : farewell speech as governor of the central bank of chile speech by mr vittorio corbo, governor of the central bank of chile, on his departure from the central bank of chile, santiago, 6 december 2007. * * * everything comes to an end. today i complete my term as the governor of the central bank of chile, a post for which i was appointed on may 1st 2003 by the then president of the republic, mr. ricardo lagos. i want, first of all, to especially greet jose de gregorio, the new governor of the central bank of chile, who i am sure will lead this beloved institution through the roads of professionalism, independence and strength it requires for the good of the country and all chileans. this is a very propitious opportunity to wish him great success in this great task. from the board and as vice - governor, jose has been a very relevant factor in the advances and accomplishments that our institution has made in the past several years. in his new position, he will be backed by a first - class board and staff of high technical and professional level, capable of assuming with rigor and efficiency the bank ’ s mission. i also want to acknowledge my fellow board members who accompanied me during this period. being it a collegiate entity, nothing would have been achieved without their active cooperation. and i want to greet sebastian claro, the new board member of the bank, who i am sure will quickly be immersed in the spirit prevailing in this institution. i believe that everyone here today share a legitimate pride because of the place this bank has achieved both in the chilean society and at the world level. let me tell you what happened to me four years and seven months ago, when president lagos asked me if it would be a problem to me to be appointed board member and governor of the central bank for such limited period, which was the remaining of the term of my predecessor, mr. carlos massad. i replied that it was not a problem, because it gave me time enough to propose and develop an agenda. it is no secret that i came to an institution that was living a crisis. my predecessor, in an act of great integrity, had chosen to resign in order to avoid the criticism that was building up against the bank from affecting its institutional capital irreparably. i was aware then that, by accepting the post, i was assuming an enormous responsibility, which consisted essentially in protecting and strengthening its institutional capital. it

path to the one that can be inferred from the different measures of private sector expectations over the two weeks prior to the statistical closing of this report. ” and in the presentation to the senate this was clarified in more detail by stating that by the end of the year the monetary policy rate could lie in the range of twenty - five basis points more or less than its current level. in practice, and only two months after that presentation to the senate, we have increased the monetary policy rate by one hundred basis points. in the board ’ s opinion, this is necessary to prevent the latest news on inflation – both internationally and its passthrough to some domestic prices – from delaying the adjustment of inflation to its target within the policy horizon. the anchor for these decisions was the baseline scenario on which the may monetary policy report was drawn up. publication of the monetary policy report is reinforced by the statements released at the end of our monthly monetary policy meetings in which we generally refer explicitly to the baseline scenario. additionally, three weeks after each meeting takes place we publish the minutes containing the board members ’ discussions which again frequently refer to the most likely scenario. with the objective of acting with the greatest independence possible in the monetary policy meetings and minimizing the risks of introducing unnecessary noise on financial markets, we have a self - imposed period of silence, or purdah, in the days prior to the meeting and to the monetary policy report release. evidence shows that financial markets are much more sensitive to information in the few days prior to a monetary policy meeting ( ehrmann and see woodford ( 2007 ) for recent discussion of the alternatives and coherence with a framework of inflation targets implemented through inflation forecast targeting. fratzscher, 2008 ) and, at the same time, any comment that is misunderstood or confused could influence the position of someone in the meeting. are there limits to transparency? the answer is definitely yes. in every democratic society, transparency is a duty. but the limit is to what point an excess of transparency might limit the bank in achieving its objective which is price stability. for example, we could televise live the monetary policy meetings but that would restrict the open, frank dialogue that goes on. besides, the discussions could be misinterpreted because they involve much technical jargon and judgments. i imagine that these same reasons prevent court deliberations from being broadcast live. in other words, since context determines conduct, an excess of transparency can limit the freedom