Third episode: deflation and the quantitative easing policy Turning to the third episode, after the bubble burst in the early 1990s, the required adjustment to the balance sheets of both the corporate and banking sectors tended to significantly lower the natural interest rate and reduce the potential growth rate from about 5% to about 1% in the mid-1990s.
BIS central bankers’ speeches  11  This brings me to the fifth and last cornerstone of Tommaso’s thinking and practice, his conceptions of central banking and his actions as a central banker. This is the area to which he devoted most of his professional life.