Plus high investment levels that will help us sustain this growth trend into the future. Still, there are big challenges ahead. Risks are present and the policies we need to adopt to confront them are not always evident. So it is essential that we keep the road clear and take good care of that which has taken so much effort to achieve. Let me say again what I said at the beginning: self complacency is one of the worst mistakes the entities responsible for our country’s economic policies can make. Thus we must pay close attention to events. As a central bank our focus is on ensuring the stability of prices and the financial system. This is the best contribution we can make to the well-being of our population. Thank you. 6  BIS central bankers’ speeches  Figure 1 GDP and demand (annual change, percent) 18  18  12  12  6  6  0  0  -6  -6  -12  -12 09  10 GDP  11  GDP minus natural resources  12 Domestic demand  Source: Central Bank of Chile.
This is a task that is not confined only to the Central Bank, but is for all economic and financial policy makers. Beyond these risks, in the scenario we consider today to be the most likely, the Chilean economy will expand at a pace that is consistent with its trends. Inflation will gradually return to 3% as specific temporary factors that have influenced recent indicators dissipate. Let me describe this scenario and the risks identified in some detail. Macroeconomic scenario Since the last Monetary Policy Report, the Chilean economy has continued to show high strength and inflation has remained limited. Contractionary risks coming from abroad have eased, while expansionary risks originating domestically have gained importance. Domestic output and demand growth exceeded projections, with a greater boost from investment and more recently also from private consumption. Dynamic expenditure has resulted in a smaller trade surplus and a high degree of internal resource utilization. Headline and core inflation indicators have dropped to near 1% annually because of a number of temporary factors, and forecasts are that they will return to 3% within the projection horizon. Internationally, the threats associated with the situation in the Eurozone are still in full force, but other risks, relating to the U.S. and China, have moderated. In this scenario, the Board has held the Monetary Policy Rate (MPR) at 5%. As I mentioned at the beginning, Chile’s GDP grew 5.6% in 2012.