funds. the depreciation trend reversed during the course of february due to a decline in external tensions and a change in pension funds ’ purchase flows. after the earthquake and tsunami, the peso experienced further fluctuations due to changes in private expectations about how the reconstruction would be financed and how insurance claims would be paid. the importance of idiosyncratic factors is apparent in multilateral indicators that measure the peso ’ s movements with respect to the dollar and other currencies, which are showing smaller variations than those of the peso / dollar exchange rate ( figure 1 ). annual cpi inflation returned to positive territory earlier than what had been foreseen in december ( figure 2 ). core measures, in particular the cpix1, continued to display low month - on - month variations. the change in methodology used to measure the cpi, which changed from a basket for the metropolitan region to a nationwide survey, had its main effects in january, when cpi inflation exceeded the rise anticipated by the market. additionally, the international scenario relevant for chile became more benign. economic activity has continued to recover globally, with chile ’ s trading partners consolidating their forecasts for strong economic growth. growth projections for 2010 and 2011 have been revised upward and commodity prices began to rise once again ( figure 6 ). perceived risk has continued decreasing in financial markets, fueling an increase in stock prices, although they remain below their pre - crisis peaks. in the past few months, the main source of stress in these markets has been concern over the fiscal situation of european economies. eurozone authorities and the imf have agreed on financial support mechanisms and have announced major adjustments, particularly in greece, thus helping reduce financial tensions. however, this issue is still cause for concern in the external scenario. around the world, central banks have continued withdrawing gradually the unconventional monetary policy measures. nonetheless, monetary authorities maintain the emphasis on the gradual nature of their interest rate normalization processes, within a context where core inflation figures remain well contained in the industrialized world ( figure 7 ). market expectations about future increases in policy rates have been postponed. overall, some countries continue with or have begun a process of increases in their policy rates. as discussed in a box in this report, just adding up the above elements configured a medium - term scenario where inflationary pressures and inflation would exceed december expectations. a counterfactual forecast exercise that considers developments only up to february 26 yields that the foreseen growth range for this year

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