. 000 - 500 - 500 - 1. 000 - 1. 000 - 1. 500 - 1. 500 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 rest of the world oil exporters emerging asia china japan united states eurozone source : international monetary fund, april 2011's weo. bis central bankers ’ speeches figure 5 multilateral nominal exchange rate ( index, 2005 = 100 ) u. s. commodity exporters chile ( 1 ) an increase indicates a depreciation of the local currency. ( 2 ) simple average of australia, new zealand and canada. source : bank for international settlements ( bis ). figure 6 real exchange rate ( index, jan. 00 - mar. 11 average = 100 ) range ( * ) average u. k. u. s. south korea mexico eurozone peru japan norway poland malaysia israel new zealand india turkey chile china thailand south africa hungary philippines canada czech rep. russia australia brazil spot ( * ) the range shows maximum and minimum values posted by the local currency during indicated period. source : central bank of chile based on figures from the bank for international settlements ( bis ). bis central bankers ’ speeches figure 7 change in the central bank of chile's international reserves ( percentage of gdp ) - 1 - 1 - 2 - 2 - 3 - 3 ( * ) reserves consider purchase of us $ 12. 00 billion announced in january this year. for gdp, growth and inflation forecasts contained in march 2011's monetary policy report are used. source : central bank of chile. figure 8 copper price and multilateral dollar ( us $ / lb ; index, january 2006 = 100 ) copper price current and one year ahead copper price forecast multilateral usd ( 1 ) gray bars depict forex intervention period. ( 2 ) dollar against currency basket of the u. s.'s main trading partners. an increase shows an appreciation of the dollar. ( 3 ) in monetary policy reports of may 2008 and march 2011, respectively. sources : central bank of chile, bloomberg and u. s. federal reserve. bis central bankers ’ speeches figure 9 average capital flows to and from emerging economies ( * ) ( percentage of gdp ) - 5 - 5 - 10 - 10 inflows outflows net flows source : central bank of chile based on imf data. ( * ) includes brazil, chile, china, colombia, egypt, hungary, india, indonesia, israel, malaysia, morocco, mexico, peru, the philippines

to evaluate at what level international prices will settle. nor can we rule out that the passthrough of previous rises in world prices to domestic ones, especially for foodstuffs, may continue. other risks have not changed materially. incoming news confirm a scenario of very dynamic domestic demand, particularly for consumption, and employment ( figure 14 ). also wage growth has speeded up and credit is recovering fast. the domestic economy is growing strongly and output gaps are closed. nonetheless, it is still early to predict an overheating. actually, the various core inflation measures are still below 3 % ( figure 15 ). output is near full capacity and, mirroring the rest of emerging economies, excess domestic demand is being redirected to imports. the current account still shows a surplus, largely because of good export prices, but also because of steadily increasing volume sales abroad. furthermore, monetary policy works with a lag, so it is likely that the full effects of the 450 - basis - point increase in the mpr since june of last year will not be seen for some time. the information we will be getting in the coming months will give us a better sense of the magnitude of these effects. overall, the negative implications of these risks materializing led us to speed up the pace of monetary policy normalization in the past few months. last week we actually raised the mpr by 50 basis points to 5 %. although the median of market expectations was foreseeing a somewhat smaller increase, we acted preventively to hold down the dynamism of domestic demand and the propagation of adverse supply shocks. now that the mpr is at 5 %, it is approaching the range that has historically been thought of as neutral. still, a high degree of uncertainty surrounds the true neutral interest rate. there are many definitions and methodologies to determine what would be the interest rate consistent with inflation being at the target and the economy operating at full capacity. although this is not the moment to get involved in a lengthy discussion over the level of the neutral rate, i think some observations are in order. on the one hand, the neutral rate is not a fixed number. it changes with the state of the economy and can even fluctuate in the short run. on the other hand, in an open economy the neutral interest rate depends not only on domestic factors such as the long - term growth rate, but also on external variables. the world is going through a period of low interest rates and in