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.
Since imbalances persist on the Swiss mortgage and real estate markets, it is important that banks take adequate account of risks when granting mortgages. We are confident that the banks are aware of these risks. We are also confident that they will not use the latitude afforded by this access to capital to pay dividends or buy back shares, but rather to fulfil their economic function. In addition to facilitating lending, the SNB is helping to stabilise the economic situation through its expansionary monetary policy. To ensure appropriate monetary conditions, we must counteract increased upward pressure on the Swiss franc. We have therefore decided to scale up our foreign exchange market inventions – a tried-and-tested instrument – to shield the Swiss economy. Ladies and gentlemen, within the scope of its mandate, the SNB is doing everything it can, in cooperation with the Federal Council and the authorities, to mitigate the economic impact of the coronavirus crisis on the population and on companies. Page 2/2