This seems to respond to an attempt to rebuild inventory levels after the reduction of late 2011 and that, at the time, was linked to the expected negative effects of the external scenario on final sales. Also worth noting was the renewed strength of consumption and gross fixed capital formation. Consumption continues to rely on the evolution of the labor market and fairly stable financial conditions. Regarding investment, the contribution of construction and infrastructure works stands out, relating mainly to mining and energy projects, but also to a strengthened real-estate sector, which reflects on the performance of commercial loans. The behavior of output, especially of sectors other than natural resources, and domestic demand intensified the utilization of installed capacity. Although y-o-y growth in employment and nominal wages has dropped, the labor market remains tight (figure iv). However, the increased domestic demand pressure, especially from investment, together with lower copper prices compared with 2011, have led to a widening of the current account deficit. In the moving year ending the second quarter of 2012 this deficit rose to 2.7% of GDP, from 1.3% at the close of 2011. In the past few months, y-o-y inflation has continued on a downward path, influenced by fuel prices. Core inflation, which excludes foodstuffs and energy (CPIEFE) has stabilized near 2.5%. The difference between core inflation for goods and core inflation for services has prevailed. The latter, more closely related to the state of output gaps, has hovered around 5%, a reflection of existing medium-term risks on inflation.
Importantly, SOFR proved to be resilient even during the market stress at the height of the pandemic last spring and will provide a rock-solid foundation for the post-LIBOR world.3 The final comment I’ll add on this topic is that while much progress has been made in the transition away from LIBOR, time is running out, and your transition from LIBOR should happen as soon as practically possible. This is not something to leave until the last minute. Economic Outlook OK, enough on LIBOR, at least for today. I’ll now turn to the theme of the economic outlook and where I see us on the path to a full recovery. Let me begin by saying that we’ve come a long way since the darkest days of the pandemic, and I expect even brighter days ahead—and I don’t just mean that because it is finally summertime. 1/3  BIS central bankers' speeches  We find ourselves at an extraordinary juncture in the recovery. Thanks to widespread vaccinations and robust support from fiscal policy, the economy is reopening more quickly and more strongly than expected. When it comes to the economy, it’s getting better all the time. The rapid rebound is excellent news—it means more jobs and a brighter future. But, it also means that we are seeing strains as businesses try to keep up with the rapid acceleration in demand for their products. After sharp declines in employment, production, and prices last year, the opposite is now occurring.