4  BIS central bankers’ speeches  Figure 2 Monetary policy rates around the world (1) (percent) 9  9  7  7  5  5  8  8  6  6  4  4  2  2  3  3  1  1  0  0 06  07 Chile  08 09 Developed econ. (2)  10 11 Emerging eco. (3)  (1) Corresponds to a simple average of the reference rates for each group of countries. (2) Includes Euro area, Japan, United Kingdom, and United States. (3) Includes Brazil, Czech Republic, China, Colombia, Hungary, South Korea, Mexico, Peru, Poland, and South Africa. Sources: Central Bank of Chile and Bloomberg. Figure 3 U.S multilateral nominal exchange rate (*) (index, March 1973=100) 160  160  140  140  120  120  100  100  80  80  60  60 73  79  85  91  97  03  09  (*) An increase indicates a depreciation of the dollar against main trading partners. Sources: Bloomberg and U.S. Federal Reserve.
This has partly been a matter of supply shocks that do not normally have lasting effects on the rate of inflation. There is therefore reason to believe that when the increased price levels drop out of the twelve-month change figures from next spring onwards, inflation will fall back from the relatively high rates at present. The picture of inflation does, however, include other features that probably have to do with the high resource utilisation during the latest upward phase. The fact that domestic inflation has moved up even though economic activity is slowing could point to some underestimation of resource utilisation or to a relationship between growth and inflation in a wide sense that for other reasons is less favourable than assumed earlier. Recovery with prospective inflation in line with the target In the Inflation Report that now lies on the table we have opted for a main scenario where growth in the rest of the world is lower than we foresaw in the previous Report in May. The situation is particularly complicated in that the usual difficulties in determining exactly when activity is likely to turn upwards are compounded by the occurrence of a structural adjustment of saving and investment, above all in the United States, at the same time as economic policy there is undergoing a marked expansionary realignment. A further major complication is the future security policy situation, which is naturally hard to assess with traditional economic tools.