There is newfound confidence in the reform process, and newfound support for European cohesion, which could help unleash pent-up demand and investment. Nevertheless, we are still in a situation of continuing slack, and where a long period of subpar inflation translates into a slower return of inflation to our objective. Inflation dynamics are not yet durable and self-sustaining.
These ratios are well above the BSP’s 10 percent regulatory floor and the international benchmark of 8 percent. •  The banking system has achieved notable gains in cleaning up their bad assets, helping bring down the NPL ratio to 5.7 percent as of end-June 2007 from its peak of around 18 percent at end-December 2001.