. the impact of the depreciation on other prices in the cpi basket has been in line with expectations ; core inflation ( i. e., the cpiefe that excludes foodstuffs and energy ) has also risen, although at a slower pace than headline cpi. inflation expectations have remained at 3 percent in the projection horizon, with a slight increase in the near term. the baseline scenario assumes that y - o - y cpi inflation will rise temporarily to the 3. 5 to 4 percent range, in the coming months, reflecting the direct propagation of the peso depreciation to the prices of goods and services. the lower use of installed capacity – proxied by the behavior of output – should mitigate inflationary pressures and the direct effects of the depreciation. as i just said, the credibility and consolidation of our inflationtargeting scheme also help. therefore, already by the end of 2014 headline inflation should move closer to 3 percent, where it should stay until the end of the projection horizon, that is, the first quarter of 2016. core inflation will hover around 3 percent throughout the same horizon ( figure 7 ). bis central bankers ’ speeches the current account deficit of the balance of payments is forecast to stand at 3. 6 percent of gdp in 2014, up a little from 2013, but below the december estimate. behind it is the expected decline in the copper price this year, which more than offsets the lower growth foreseen in domestic demand and imports. this implies that, measured at trend prices, the deficit will narrow further, approaching 3 percent of gdp. as for gdp, the rate of total investment will go slightly above 23 percent in nominal terms ( somewhat more than 25 percent in real terms ), while national savings should amount to 19. 5 percent ( table 2 ). aside from the already discussed trajectories foreseen for domestic growth and the world economy, this forecast uses as a working assumption that nominal wages will be adjusted in line with productivity and the inflation target. it also uses as a methodological assumption that the real exchange rate will remain stable, considering that it is now inside the range believed to be consistent with its long - term fundamentals. finally, the baseline scenario uses as a working methodological assumption that the mpr will follow a trend comparable with the one that can be derived by the prices of financial assets prevailing at the statistical closing of this report ( figure 8 ). the baseline scenario reflects those events that are

believed to be the most likely to occur with the information at hand at the closing of this report. there are risk scenarios, however, which if materialized, may reshape the macroeconomic environment and, therefore, may modify the course of monetary policy. on this opportunity, having evaluated the alternative scenarios, the board estimates that the risk balance is downward biased for output and unbiased for inflation. abroad, one first risk has to do with the behavior of emerging economies, especially china. the latter risk has been present in several reports already and has recently been exacerbated because of growing doubts posed by the fragility of the chinese financial system and the overall increase in the risk perception of the emerging world. in particular, adeterioration in the chinese economy would have first - order effects on chile and the group of emerging economies, spreading through both real and financial channels. of particular importance is its impact on the prices of commodities, including copper, as well as on the growth of other important trading partners. moreover, it cannot be ruled out that the vulnerabilities that some emerging economies have accumulated may generate new episodes of volatility it is also possible for the recovery process in the u. s. to end up being stronger than expected. the timing of its effects shows different signs. in the short term, the anticipated normalization of the monetary stimulus could lead to a worsening of financial conditions for the emerging world, inducing new episodes of volatility as in recent quarters. going forward, the effect of increased external demand and higher commodity prices would prevail, with positive effects on economies like chile that have solid fundamentals. overall, the risk associated with the complex fiscal and financial situation in the eurozone is still present and, moreover, heightening of geopolitical tensions in ukraine could affect commodity prices, as well as confidence in europe. at the local level, an important part of the economic slowdown of recent quarters is due to a drop in investment. the baseline scenario assumes that this phenomenon will not deepen and for some components it will even be reversed. but there are risks, particularly since the drop in investment in late 2013 was sharper than expected. for example, it is possible that, due to its natural inertia, investment may remain weak for longer than foreseen. another risk is that a deterioration of the global economy may pull down the copper price below its longterm level, deferring new projects and slowing economic