In fact, with the measures adopted last year and specific factors cleared out, the money market’s interest rates have shifted toward levels in line with the current and forecast levels of the policy rate (figure 1). Beyond the recent measures, the Bank has at its disposal a toolkit it can use when the need arises. On one hand, in the years 2008 and 2009 we devised new ways to provide domestic and foreign currency liquidity which can be activated quickly but which in the present conjuncture have not been thought necessary. In case of a worsening of external financial conditions, the Central Bank has to possibility of alleviating its effects by using a number of guaranteed financing instruments, such as swaps, long-term REPOs and collateral extension, among others. Moreover, there are reserves available of close to 40 billion dollars, augmented with the reserve hoarding plan we carried out in 2011 and which has helped to strengthen the liquidity position of the Chilean economy. It is worth noting that these measures are an alternative for providing subsidiary support, whose adoption is warranted only in the presence of major distortions in monetary and financial markets. In this complex environment, agents, banks, financial intermediaries and firms need to carefully evaluate the associated risks and take prudent action to properly manage their liquidity and financial risks. Any hasty behavior of the authority may mistakenly signal bad conditions to a market that is operating normally.
Chile)  3.5  6.3  4.2  4.2  3.6  3.6  4.0  3.9  Commodity exporters  3.1  2.9  2.0  2.1  2.5  2.4  2.8  2.6  Trading partners  3.6  6.1  4.2  4.2  3.8  3.8  4.2  4.3  Terms of trade  8.1  23.8  -2.9  -  -6.7  -  -3.5  -  (levels) LME copper price BML $  -  342  401  -  350  -  340  -  Gasoline price $  -  598  804  -  784  -  748  -  (e) Estimate. (f) Forecast. (1) Assuming average economic growth for the rest of the world of 3.2% in the three-year period 2011-2013. (2) Assuming average economic growth for the rest of the world of 1.7% in the three-year period 2011-2013. Sources: Central Bank of Chile based on a sample of investment banks, Consensus Forecasts, the IMF and statistics bureaus of respective countries. Figure 1 Conditions of 90-day rates in CLP market(1) (2) (percent) 12  12  10  10  8  8  6  6  4  4  2  2  0  0 08  09  10  11  12  (1) Prime deposit rate. (2) Dotted vertical line marks date of CBC's REPOS purchase announcement. Source: Central Bank of Chile. 4  BIS central bankers’ speeches