other emerging economies, which because of vulnerabilities accumulated in the past, now have difficulties to take more resolute action in this matter. today our economy is ready to resume a higher growth path. this assertion is based on the fast and significant adjustment it made during the year, as reflected in the current account, interest rates and the real exchange rate. also in the fact that external conditions forecast to 2015, while less auspicious than expected in september, point to an improvement from this year. and last but not least, in the strength of our economy and our institutions. the significant monetary impulse that has already been added, the increased fiscal impulse and the effect of the peso depreciation on the performance of tradable sectors will lend support to economic activity. the depreciation of our currency has favored the exporting sectors and the regions where some of these sectors are based. it is worth noting that, as can be inferred from our business perceptions report, certain regions of our country, especially to the south, which have endured difficult moments in the past few years, now largely outperform their peers up north. however, as i already mentioned, inflation remains high and above projections, a sign that for the time being monetary policy actions have reached its limit. although we are convinced that inflation will return to near 3 percent over the course of 2015, we cannot rule out that this convergence is slower than expected. this is important, because in the end, we must not forget that higher inflation hits hardest those most vulnerable sectors of the population, as they have fewer tools to deal with it. in this sense, absent significant changes in the scenario we estimate to be the most likely, we do not see that, in the short run, we should increase the monetary impulse, which is already strong enough. of course, if the baseline scenario changes, we will need to reconsider. our baseline scenario assumes that the economy will return to higher growth rates in 2015. however, it is our concern and we see as a significant risk that the recovery of output and expenditure has been postponed and weakened in the past few quarters. as i said, thirdquarter indicators were weaker than expected, and partial fourth - quarter numbers have failed to display a significant change in these trends. in addition, consumer and business confidence has deteriorated further. the outlook i am presenting today, as well as that in september, assume that said confidence will be regained. ensuring better internal conditions is

throughout history, including three times just in my own career : the mid - 1970s, the late 1980s and just recently ). the federal reserve ’ s efforts to revamp the regulatory framework are being led by governor tarullo, who is providing focused, important leadership on this critical matter. 5 the revamping is largely shaped by the dodd – frank wall street reform and consumer protection act ( “ dodd – frank ” ), which became law last summer. the act establishes a new regulatory infrastructure for promoting financial stability. among its most prominent macroprudential features is the financial stability oversight council, an interagency body charged with detecting and deterring threats to the financial system. the act also establishes an office of financial research, a mechanism for the orderly winding down of failing financial firms, and new responsibilities for the federal reserve in overseeing certain nonbank financial companies and certain payment, clearing and settlement utilities. the federal reserve board is also directed to develop enhanced prudential standards for large banking organizations and systemically important nonbank financial firms. dodd – frank itself mostly provides only high - level direction, leaving an extraordinary number of details and critical decisionmaking to regulatory discretion. as a result, the ultimate nature and future of reform rest in the hands of regulators. as many of you are aware, the various regulatory agencies are presently seeking public comments on a range of issues involving implementation of dodd – frank. most regulatory reform initiatives applied since the banking act of 1864 have missed the mark. they looked good on paper and appeared to solve the problems of the day but later proved not up to the task. this is especially true with efforts to solve the “ too big to fail ” problem, in which an unwillingness to follow through on prior policy commitments to actually close down large failures and impose losses on their uninsured creditors has led to what economists call “ time inconsistency ” in policy. let ’ s hope this time will be different, that regulators will make their commitments credible and consistent with future rather than past needs. 6 having come from the financial industry, i take a keen interest in these issues, and i hold some strong opinions as to how we should proceed. i believe there are leverage points for effective reform. there are areas where, if regulators act decisively, they might have profound positive effects and avoid time inconsistency. conversely, there are other areas where regulatory action would at best generate small benefits and, in the worst case, might actually be counterproductive.