As I will explain shortly, the overcoming of deflation and the achievement of the 2 percent price stability target require that the expected real interest rates be maintained at low levels. It is therefore important that the extent of a pickup in nominal interest rates due to a rise in inflation expectations be lower than that of a rise in inflation expectations itself.
Past experiences both inside and outside the European Union indicate that measures to promote the efficiency and integration of markets, the encouragement of entrepreneurship and the fostering of a knowledge-based economy are clearly working in this direction and are thus in the interest of all member countries. We are now at your disposal for questions. 2  BIS Review 29/2001