Nonetheless, it is difficult to identify how much of this decline is due to a lower external stimulus, how much is accounted for by a natural slowdown in each economy, and what part is explained by particular events. All these elements add up to a situation in which, although the external scenario is not worsening, the belief that risks have disappeared is far off. It is possible to think that the likelihood of extreme scenarios is low, but, in my opinion, it is still there. More challenges for monetary policy As already mentioned, the change in how the global panorama was perceived led many emerging economies to change their views on their future economic policies. This made them halt their processes of lowering expansiveness and/or made them resume impulse. However, the new change of mood brought about by the greater calm of the beginning of the year, coupled with geopolitical factors, has again put us in a dilemma. On one hand, probably as a result of the recent memory of the late 2008 and early 2009 global confidence crisis, most economic authorities quickly set up a close monitoring system and prepared a batch of instruments to implement a quick offsetting of the adverse effects of a global crisis. However, time has shown that the effects of the crisis of the Eurozone area have been fairly limited so far. Financial markets have suffered the biggest impacts, but trade, output and employment have not been greatly affected.
Between August and October, probably on the peak moments of the last financial turbulences in the developed world, many central banks stopped the process of interest rate raises, and many also changed the direction of changes in their monetary policies to more expansive ones. In Chile, after raising MPR by 200 basis points during the first half of 2011 and stating that there were still some increases to be made, in August we moved towards a neutral stance. In October, considering the envisaged consequences of the deterioration of the international scenario, we announced that we would increase monetary impulse if we foresaw that this situation could have a negative impact on our economy. Thus, in January of this year we lowered the MPR by 25 basis points. Now we have announced that new monetary policy actions will depend both on our assessment of the effects of the international scenario on the domestic economy as well as on the evolution of the domestic economy itself. Allow me to present you our vision of what is going on in the world and how it will affect us. Particularly, to do so from a monetary policy perspective. The current international scenario The onset of 2012 has surprised us with a considerably calmer state of affairs than we expected a few months ago. The Eurozone situation is far from being solved. There are many challenges ahead, among them increasing productivity in many peripheral economies. Nonetheless, significant progress has been made.