Similarly, keeping a floating exchange rate policy points in the same direction, as it provides the proper incentives for prudent management of external liquidity and borrowing. It also helps in the economy’s process of real adjustment when facing a deterioration in the external scenario. In terms of both the exchange rate and access to credit, it is of high importance not to distort the incentives of financial institutions and firms to prudently administer their risks in a complex environment. To sum up, I would like to point out once again that the Board of the Central Bank of Chile strongly believes that as a country, and particularly as a Bank, we are well prepared to confront periods of stress. We are certainly not immune to the events outside our borders, and risks are very high today. We have at our disposal the necessary tools to mitigate the effects of more adverse external conditions but, most importantly, we can and will use them whenever the situation calls for it. Solid proofs of this are the measures we have taken in the last weeks. Thank you.
Progress has been made in several areas, but the problems’ complexities and the political difficulties to deal with them are huge. This, coupled with the delicate position of consumers and firms, has translated in deteriorating economic expectations in the region, anticipating a recession during this year. The situation in the United States, while less severe than that in Europe, is also complex, especially because of the slow recovery and little room for fiscal and monetary policies to stimulate the economy. The emerging world, Chile included, will undergo a period of slower growth than in the past few years. Market consensus forecasts, last week’s IMF projections, and also those in our December 2011’s Monetary Policy Report point in the same direction (table 1). Most recently, the information coming from the U.S. shows a somewhat better performance than was forecast some weeks back, but does not modify medium-term problems and risks affecting its economy. In fact, last week the Federal Reserve extended from mid-2013 to end-2014 the period during which it would hold the fed funds rate at the minimum level where it is today, which reflects the magnitude of the problem. Meanwhile, information from China reveals its economy is growing strongly. It also shows a relief of inflationary pressures in that country, providing more space for policy-making. The prices of commodities, especially copper, have recovered significantly in the past few weeks. Actually, today’s price of this metal is substantially higher than we had forecast for the year.