These schemes pursue low, stable inflation, healthy public finances, strong and well regulated financial systems and realistic exchange rates. Of course policies vary from one country to another, but their basic principles are shared. In Chile, a fiscal policy that saves during good times, an autonomous central bank that conducts monetary policy under an inflation targeting regime and a floating exchange rate, were key elements to successfully work its way out of the crisis. Furthermore, the country has a solid, well regulated financial system that does not allow for many of the operations that dragged some economies to their  BIS central bankers’ speeches  1  troubled present-day situation. A traditional banking model dominates the banking industry, where a strong base of deposits, both personal and institutional, permits to finance mainly credits. Before the crisis, a lot was said about the decoupling of emerging economies’ growth path from that of developed countries. This idea, which gained momentum in 2007 and 2008, was seriously questioned during the disaster because, as I said, no one was spared its effects. In hindsight, however, we can say that there actually was a decoupling. It is true that in a globalized world commercial and financial intertwining does not allow the economies to isolate themselves from the global cycle, but the performance of emerging markets is living proof that mitigating the negative consequences from the external cycle can be done.
It is actually on a flatter slope than it was in the 1990s and that of other emerging economies  4  BIS central bankers’ speeches  that have adopted measures to control capital inflows (figure 12). Still, it is important to be on the watch for excess flows that might incubate financial fragilities and exacerbate economic cycles, in which case it could be necessary to review financial regulations in place to avert any costly imbalances. Recent monetary policy decisions The scenario outlined in the latest Monetary Policy Report assumes that in the coming quarters the Chilean economy will grow in line with its potential. This will allow trend inflation, today in bounded levels, to converge and remain around the 3% target in the coming quarters. To achieve this objective, we have withdrawn some monetary stimulus, bringing the monetary policy interest rate (MPR) closer to the neutral range. Although this is the baseline scenario, the Report also indicated that inflation (and growth) risks were biased upward. For inflation, arguments were based on the combination of adverse supply shocks in energy and foodstuffs, the closing of output gaps and the strong dynamism of the domestic demand. Some of the aforesaid risks have eased. Private inflation expectations have moderated, consistently with MPR adjustments and the recent decline in oil prices and other commodities (figure 13). Anyway, commodity markets remain volatile, so it is premature to evaluate at what level international prices will settle.