The prices of oil and copper combined, plus those of other Chilean exports, determine a less favorable trajectory of the terms of trade in the policy horizon. Thus, between 2018 and 2020, the terms of trade will accumulate a decrease of the order of 3% compared to a fall of 2% estimated in March (Figure 10). On the side of inflation in Chile, the annual variation of the CPI and the CPI excluding food and energy (CPIEFE) levels remains around or slightly below 2%, without showing significant differences than expected in March. As has been the trend of recent quarters, CPIEFE inflation has been dominated by the evolution of the exchange rate, the persistent capacity gaps in the economy and the indexation of some prices to lower inflation rates (Figure 11). In the baseline scenario, we continue to expect CPIEFE inflation to have a slow convergence to 3%–not very different from what we expected in March–, while for headline inflation we foresee it reaching 3% sooner than we thought then. In the former case, this is consistent with an economy that, beyond recent data, will close its capacity gaps over the next two years, and with a real exchange rate that, as I said, will return to near its historical average during the policy horizon. For headline inflation, its faster achieveent of 3% is explained by the increase in fuel prices measured in pesos (Figure 12).
Mugur Isărescu: Convergence towards euro enlargement Opening speech by Mr Mugur Isărescu, Governor of the National Bank of Romania, at the European League for Economic Cooperation’s (ELEC) Monetary Conference, National Bank of Romania, Bucharest, 4 June 2019. * * * As prepared for delivery Your Excellency Baron Snoy, Dear members of ELEC, Ladies and gentlemen, It is a pleasure for me to open this ELEC Conference, which is the 9th taking place in Romania and hosted by the National Bank. It all started in 2011 with “Renewable energy and transport infrastructure in the Black Sea Region”. One year later we talked about “Eastern Europe and the EMU: finding the optimal path for introducing the euro”. In 2013, there was the 3rd edition of the Danube Financing Dialogue. The following year the dialogue focused on “Agriculture and environmental protection in Central and Eastern Europe and their contribution to growth and employment”. In 2016, we discussed “How the EU can generate a virtuous circle in the Black Sea Region – the case of food and energy security” and in 2017 we debated on “the challenges for Eastern Europe in the present turmoil in the EU and EMU – persevering in the reforms and investing for the future”. The topic of the last year, “Convergence towards euro enlargement”, is approached again today, which is more than welcome, given the importance attached to this issue. The debate on convergence and euro adoption is broad-based and complex. The topic has been addressed in yesterday’s dinner speech by Academician Daniel Daianu.