Turning to the debt burden of households and firms, as we noted in our Financial Stability Report of the second half of last year, the financial indicators of the corporate sector look favorable, with a stable and limited currency mismatch. The household average shows no financial deterioration because the increase in private consumption has been accompanied by an increase in labor income. However, households as well as firms must keep a watchful attitude facing possible risk scenarios. As for banks, the sector has adequate capital levels to absorb the materialization of a severe risk scenario. As shown in our last Financial Stability Report, stress tests indicate that the banking system’s current levels of capitalization would permit it to absorb an episode of sharp GDP slowdown, an increase in the cost of credit in pesos and an exchange rate depreciation. Meanwhile, the State keeps a net creditor position, contributing to the access to external loans at low spreads. Our terms of trade, although lower than some months ago, are high by historic standards, and our external credit access conditions are good, also by historic standards as well as compared with other emerging economies. Annual inflation is somewhat above 4%. The latest monthly CPI figure was unexpected, but given its characteristics it does not change our evaluation of the medium-term inflation trend, which remains centered on 3%, just as we stated in our Monetary Policy Report. Private inflation expectations are also stable around 3% y-o-y.
Similarly, keeping a floating exchange rate policy points in the same direction, as it provides the proper incentives for prudent management of external liquidity and borrowing. It also helps in the economy’s process of real adjustment when facing a deterioration in the external scenario. In terms of both the exchange rate and access to credit, it is of high importance not to distort the incentives of financial institutions and firms to prudently administer their risks in a complex environment. To sum up, I would like to point out once again that the Board of the Central Bank of Chile strongly believes that as a country, and particularly as a Bank, we are well prepared to confront periods of stress. We are certainly not immune to the events outside our borders, and risks are very high today. We have at our disposal the necessary tools to mitigate the effects of more adverse external conditions but, most importantly, we can and will use them whenever the situation calls for it. Solid proofs of this are the measures we have taken in the last weeks. Thank you.