06 07 08 09 10 aggregate rer 01 02 03 04 05 06 07 08 09 10 regional rer source : central bank of chile. figure 6 real exchange rate by sector ( index, 96 - 07 = 100 ) manufacturing total exports agriculture, forestry & fishing mining ( * ) rer estimated using unit - value indexes. latest date corresponds to third quarter 2010. source : central bank of chile. figure 7 nominal exchange rates ( averaged index, 1 / jul / 2007 - 10 / dec / 2010 = 100 ) peru thailand rango promedio eurozone czech rep. mexico south korea israel canada colombia indonesia malaysia new zealand brazil chile south africa japan australia spot ( 1 ) range indicates peaks and troughs of the local currency parities during the period. ( 2 ) spot value as of 10 december 2010. sources : central bank of chile and bloomberg. figure 8 real exchange rates and international reserves ( * ) ( percent ) depreciation of rer ( % ) lithuania bulgaria denmark hungary czech rep. estonia hong kong algeria n. zealand china poland peru romania israel russia canada japan sweden korea malaysia phillipines s. africa mexico indonesia australia chile brazil norway argentina - 5 - 10 india - 15 latvia croatia - 5 turkey saudi arabia singapore thailand iceland reserve acumulation as % of gdp ( * ) considers variations between september 2009 and november 2010. source : central bank of chile based on data from the bis and bloomberg. figure 9 net capital flows ( percentage of gdp, average for each period ) - 1 brazil chile 1996 - 1997 colombia 2007 - 2008 mexico peru 2010 ( f ) ( f ) forecast. considers actual data through second quarter 2010 and estimates for second half 2010, based on the share in net capital flows to latin america in 2009 and forecast for 2010 from weo, october 2010. source : central bank of chile based on imf figures. figure 10 monetary policy interest rate ( * ) ( percentage ) 10, 8 7, 3 3, 0 3, 2 3, 4 advanced commodity exp. emerging asia 4, 8 5, 3 brazil bric latin america 1, 0 emerging europe 0, 5 eurozone 0, 3 u. k. 0, 1 u. s. japan chile ( * ) simple averages by region. emerging asia includes : china, the philippines, hong kong, indonesia, india, malaysia, south korea, thailand and taiwan. emerging europe includes : hungary, poland, the czech rep. romania and russia. advanced commodity exporters includes : australia, canada

rodrigo vergara : the monetary policy report and the financial stability report presentation by mr rodrigo vergara, governor of the central bank of chile, before the finance commission of the honorable senate of the republic, santiago de chile, 21 december 2015. * * * both reports can be found at http : / / www. bcentral. cl / en. accompanying figures and tables can be found at the end of the speech. introduction mr. president of the finance commission of the senate, senator andres zaldivar, senators members of the commission, ladies and gentlemen, i appreciate your invitation to present the vision of the board of the central bank of chile on recent macroeconomic and financial developments, the respective outlook and its implications for monetary and financial policy. this view is contained in detail in our monetary policy report of december 2015 and in our financial stability report for the second half of 2015. in the past few months, annual cpi inflation evolved in line with september ’ s estimates, although its core component – the cpiefe – posted a slightly larger increase, reflecting the further depreciation of the peso in the period, with still bounded output gaps and within the historical indexing patterns. gdp growth for the third quarter matched the projections, while domestic demand was somewhat higher. thus, the economy continued to grow in the range of 2 to 2. 5 percent. the external scenario has worsened, due to the drop in the terms of trade, particularly the price of copper, sluggish growth of our trading partners, and notso favorable financial conditions. the policy rate increase in the united states last week is the most significant development of the recent past. in this context, in the baseline scenario that i will be presenting in a moment, the growth outlook for 2016 is revised downward and the convergence of inflation with the target is pushed back somewhat. this results in the september scenario being intensified, with stronger short - term inflationary pressures that should ease into the medium term. with this scenario in mind, in september we estimated that, to ensure the convergence of inflation with the target, it would be necessary to withdraw part of the monetary stimulus then in place. we began the process in october and continued it in december, taking the monetary policy interest rate ( mpr ) to 3. 5 percent. in the baseline scenario i will describe, we considered measured adjustments that would be made at a pace that would depend on incoming information and its implications on the inflation outlook. the monetary policy stance will continue to