Still, the high level of annual inflation today is largely due to the significant depreciation of our currency in recent quarters. On the output side, third-quarter figures showed GDP and domestic demand growing less than forecasted. In addition, fourth-quarter figures at hand show no signs of significant recovery. Thus, we foresee that achieving higher output growth rates will take longer than we thought last September. On aggregate, the international scenario has changed little since our last IPoM. Perhaps the most significant development has been the sharp fall in the oil price in the past months, whose effects have begun to show in prices and will intensify in the near future. Meanwhile, although risk perceptions have increased and we had an important volatility episode in October – which vanished soon – no significant changes are observed in terms of global growth. At home, we completed a process of reducing the monetary policy interest rate (MPR), that took it from 5 to 3 percent between October 2013 and October 2014. This sharp reduction led the MPR to quite expansionary territory, in line with the economic slowdown already mentioned. Funding costs in the domestic market have declined significantly, with mortgage loan rates nearing their all-time lows. Notwithstanding, business and household expectations have deteriorated throughout the year and are now clearly pessimistic, influencing downward this year’s growth and slowing further the recovery foreseen for 2015.
Figure 10 Companies' financial indicators (percent) 120  9  100  8  80  7  60  6  40  5  20  4 07  08  09  Debt/GDP (1)  10  11  12  13  14.III  Profitability of SVS companies (2)  (1) Based on firm-level information. 2007 and 2008 figures estimated using aggregate data. (2) Profits accumulated in 12 months before financial expenses and taxes on total assets of nonfinancial SVS companies. Source: Central Bank Chile based on Achef, SBIF, SII, and SVS data. BIS central bankers’ speeches  13  Figure 11 New home prices and office-space vacancy rate (Metropolitan region) (index, 2008 average = 100; percent) 150  12  140  10  130  8  120  6  110  4  100  2  90  0 08  09  10  Housing prices CChC  11  12  13  14  Office-space vacancy rate  Source: Central Bank of Chile based on Global Property Solutions and CChC data. Figure 12 Household indebtedness and financial burden (percent of disposable income) 60  18  55  16  50  14  45  12  40  10 06  07  08  09  Debt-to-income  10  11  12  13  14  Financial-burden-to-income  Source: Central Bank of Chile based on SBIF, SuSeSo, and SVS data.