Chile has put into place a successful combination of consistent fiscal discipline and monetary credibility. This framework has been reinforced by good co-ordination between macroeconomic policies and structural reforms that enabled a better control of public expenditure, while providing the foundations for a more competitive economy and greater social equity. Important buildingblocks in the linkages between macro and structural policies, as well as between financial and real markets, have been the reform of the pension system, the recent creation of an explicit structural surplus rule and a sustained disinflation process. The latter is presently supported by a credible inflation targeting regime together with a floating exchange rate. It should be stressed that the need to preserve macroeconomic stability has a large consensus in Chile...