Thus, regardless of the fact that we assess current interest rates as high in real terms, we borrow more and save less. Therefore, my second message reads as follows: the best option for the NBS is to persist in its attempts to attain low and stable rate of inflation in order to ensure low interest rates in real terms.
What makes the current economic situation extra challenging is that external shocks, like the ones we are experiencing today, might take time to fully materialise. We learned this from the two oil crises in the 1970s. The oil shocks in 1973 and 1979 led to an increase in banking provisions that only peaked in 1983.