With regards to the extent to which financial stability conditions should be incorporated into monetary policy decision, one prominent view is that financial stability should be addressed mainly by macroprudential tools, and that, if effectively deployed, macroprudential tools can free up monetary policy to focus on price and output stabilization objectives. While this might hold true in some advanced economies, operationalizing macroprudential tools in practice—especially in emerging markets—has proved challenging. Limited experiences and complex interactions among various policy tools make calibrating macroprudential measures extremely difficult, not to mention the risk that these tools might inadvertently push some activities outside of the regulatory umbrella into shadow banking. My view, therefore, is that macroprudential tools are complements, rather than substitutes, for the broader monetary policy stance. Ladies and gentlemen, The three factors I have mentioned—inflationary pressure, growth, and financial stability—are factors that the MPC consistently looks at when deliberating monetary policy’s transition under the flexible inflation targeting framework. But before I make my concluding remarks, I would like to mention that when we are confident that economic growth is close to its potential and inflation will remain within our target range, the MPC can take a longer view. And this is when policy space should be taken into consideration. Two considerations are at play. First, history has taught us that a period of prolonged economic expansion comes with asset price bubbles and market correction and recession. A gradual, anticipated, movement in the policy rate reduces the risk and the size of such outcome.
12  December  Figure 5 Real annual contributions to gross fixed capital formation GFCF (*) (percentage points)  16  16  12  12  8  8  4  4  0  0  -4  -4  -8  -8  -12  -12  -16  -16 09  10 11 Housing  12  13 Other  14  15  16 Mining  17  18 19 20 Non-mining  (*) For 2017 mining investment is estimated using information available from companies' uniform coded statistical report FECU. Housing investment uses household investment figures in the National Accounts by institutional sector. The GFCF component "Other" is treated as a residue. To report forecasts for 2018, 2019 and 2020, Central Bank forecasting models and sectoral sources are used, including the Corporation of Capital Goods' investment plans and survey. Source: Central Bank of Chile.