The Board reaffirms its commitment with the inflation target and will take every action necessary to ensure that it will return to 3 percent annually within the policy horizon. It also reiterates the need for all financial system participants to properly assess their borrowing and lending conditions. We, as the Central Bank, will continue to contribute with what is our duty – that is, safeguarding the stability of our currency and the normal functioning of internal and external payments – to Chile’s development and welfare. Thank you. 6  BIS central bankers’ speeches  Figure 1 Inflation indicators (*) (annual change, percent) 5  5  4  4  3  3  2  2  1  1  0  0 11  Jul. 12  Jul. 13  Jul. CPI  CPIEFE  14  (*) Starting in January 2014, calculations are based on the new indices with base year 2013=100, so they may not be strictly comparable with earlier figures. Sources: Central Bank of Chile and National Statistics Institute (INE).
These increases underline our determination to ensure the timely return of inflation to our two per cent medium-term target. The elevated level of uncertainty reinforces the importance of a data-dependant approach to our policy rate decisions, which will be determined by our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission. The asset purchase programme portfolio has been declining at a measured and predictable pace since March 2023, as the Eurosystem is no longer reinvesting all of the principal payments from maturing securities. Regarding the pandemic emergency purchase programme, the Governing Council intends to reinvest all principal payments from maturing securities purchased under it until at least the end of 2024 and will continue applying flexibility in reinvesting redemptions. We are monitoring current market tensions closely and stand ready to respond as necessary to preserve price stability and financial stability in the euro area. The euro area banking sector is resilient, with strong capital and liquidity positions. In any case, our policy toolkit fully equips us to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy. Economic activity  1/4  BIS - Central bankers' speeches  Growth in euro area GDP slowed progressively over the course of last year and stagnated in the fourth quarter.