an objective of the single monetary policy. after all, an exchange rate target could very well come into conflict with the price stability mandate. all parties who are now raising the spectre of political exchange - rate targets need to be aware of this. in addition, a unilateral focus on exchange rates would also be difficult to conceive for the monetary policy of a large currency area, as targeted devaluation of the domestic currency could always trigger opposite reactions from other currency areas. this would end up leaving all countries involved worse off than before. however, the exchange rate – like other economic factors – is relevant to the eurosystem ’ s monetary policy inasmuch as exchange rate movements can impact on the movement of price levels within the single currency area. we are currently in the midst of a period of exceptionally low inflation in the euro area, which will probably last for some time to come. the ecb governing council will therefore also observe further exchange rate developments very carefully in its monetary policy decisions. in light of the public debate about the movement of the euro ’ s exchange rate, we must not overlook the fact that interest rates in government bond markets in the euro - area member states have dropped again considerably in the past few weeks. one of the factors behind this development seems to be that international investors are shifting their investment portfolios and increasingly returning their funds to euro - area countries. this also appears to include investments precisely in those countries hit particularly hard by the crisis. this change in capital investment patterns appears to have contributed to the rise in the euro ’ s external value while at the same time perceptibly easing funding conditions. the short - term dampening impact of a currency appreciation is offset by the positive growth effect created by more favourable funding conditions. over the medium to long term, the expansionary funding impact is likely to prevail. it would therefore be short - sighted to look only at exchange rate movements without taking into account the stimulating impacts of falling government bond yields. ladies and gentlemen, i, too, would like to take something into account : the time schedule. i have spoken a lot about confidence. i am therefore confident that you will forgive me if i ’ ve exceeded my allotted time limit somewhat. i hope you all have a successful symposium, in which you will obtain new knowledge from the various talks and have a lively exchange of information and opinions at the panel discussions. bis central bankers ’ speeches

on a sample of investment banks ( ib ), consensus forecast and international monetary fund. wti oil price ( us $ / barrel ) 2008 ( f ) 2009 ( f ) jan. mpr mar. 08 jan. mpr mar. 08 doe ( 11 mar ) deutsche bank ( 07 mar ) jp morgan chase ( 14 mar ) scotiabank ( 14 mar ) lehman brothers ( 29 feb ) barclays ( 19 mar ) - - - - - - goldman sachs ( 04 mar ) merril lynch ( 19 mar ) - - - - - ib's mean - - - - central bank of chile actual mean ( 1 ) excludes goldman sachs and merrill lynch. ( 2 ) up to 24 march 2008. sources : central bank of chile based on a sample of investment banks ( ib ), consensus forecast and international monetary fund. we are in the presence of a significant relative price shock. the relative price of foodstuff and energy has changed in a number of countries. given the persistency of these international relative prices changes, domestic prices are adjusting accordingly, giving the appropriate signals for resource reallocation. chile is an interesting case in this respect. relative food prices for several countries ( ratio ) 1, 2 1, 2 1, 1 1, 1 1, 0 1, 0 0, 9 0, 9 0, 8 0, 8 0, 7 0, 7 usa mexico chile euro zone china brazil new zealand sources : each country ’ s central bank and statistics bureau, bloomberg and international monetary fund. relative energy prices for several countries ( ratio ) 1, 6 1, 6 1, 4 1, 4 1, 2 1, 2 1, 0 1, 0 0, 8 0, 8 usa mexico chile euro zone china brazil new zealand sources : each country ’ s central bank and statistics bureau, bloomberg and international monetary fund. the impressive scale of the supply shocks and their transmission to chilean domestic prices can be appreciated by comparing the unusual increase of some prices in 2007 with their average increase since the year 2000. non - perishable foods rose by nearly 15 % last year, while only around 2 % per year in 2000 - 2006. the prices of fresh fruit and vegetables – even considering high - price years like 2002 and 2005 – fell by an average of nearly 2 % between 2000 and 2006, while in 2007 they increased by more than 30 %. during last year, the price of gasoline unexpectedly increased by almost 15 %. one characteristic of the chilean economy is that changes in