##1 - 91. pdf. corbo, v. and a. tokman ( 2007 ), “ latin america in a global world : challenges ahead ”, central bank of chile, documento de politica economica no. 19. de gregorio, j. ( 2008 ), “ el crecimiento economico de la america latina : del desencanto del siglo xx a los desafios del xxi ”, el trimestre economico, vol. lxxv ( 1 ), no. 297, pp. 4 - 45. ehrman, m. and m. fratzscher ( 2008 ), “ purdah. on the rational of central bank silence around policy meetings ”, ecb working paper, no. 868. greenspan, a. ( 1998 ), “ income inequality : issues and policy options ”, speech at a symposium sponsored by the federal reserve bank of kansas city, jackson hole, wyoming. meade, e. and d. stasavage ( 2008 ), “ publicity of debate and the incentive to dissent : evidence form the us federal reserve ”, the economic journal, april, pp. 696 - 717. woodford, m. ( 2007 ), “ the case for forecast targeting as a monetary policy strategy, ” journal of economic perspectives, vol. 21, no. 3 - 24.

times in the course of five weeks and there are presentations of special topics, a great many bilateral meetings and draft reports are revised and discussed at length prior to publication. therefore in this process the board members form their opinion on the determinants of inflation and how monetary policy should evolve. this kind of reporting was introduced by the bank of england in 1993 and is a common practice among central banks that have inflation target regimes. today a great number of banks publish inflation reports and in a survey carried out by fracasso et al. ( 2003 ) our monetary policy report was classified in 5th place out of a sample of twenty such reports, the bank of england ’ s being judged the best. to provide a basis for discussions on monetary policy, the board decides which are the key variables of the most likely economic scenario. the projections for these variables derive from sources considered to be the most realistic and widely accepted. for example, the outlook for world growth is based on the consensus forecast and the international monetary fund ’ s projections published in its world economic outlook. the outlook for commodity prices generally follows the futures market prices. of course, these projections are imperfect – all projections are inherently uncertain – and the board places particular emphasis on the risks and threats that may cause deviation from the baseline scenario. thus, while making the baseline scenario as realistic as possible, the important discussion centers on analysis of the deviations from it and, above all, what are the implications for monetary policy that are coherent with our inflation target. to make this most likely scenario more useful, we need to consider not only the external economy but also discuss the outlook for the key variables of our own economy, particularly exchange rate and interest rate. 1 to project the path of exchange rates, we use the interest rates parity, that is, the exchange rate varies according to interest rate differentials. if the domestic interest rate is lower than the international interest rate ( adjusted for risk premiums ), the exchange rate can be expected to depreciate. furthermore, we have to make some assumption about where the exchange rate will be in the long run. for this purpose, we assume that if at the moment of making the forecast the real exchange rate is consistent, within a reasonable margin, with its long - term fundamentals, it will remain at the current levels in the long run. on the contrary, if it is deviated from fundamentals, we assume that the exchange rate will converge to values coherent with its long run levels. 2