Since the spring of this year, there have been signs of a nascent recovery, the “green shoots”, mainly thanks to the policy reactions around the world and especially to a rebound in Asia. However, the economic recovery is still fragile and reliant, in no small measures, on expansionary monetary and fiscal policies.
Moreover, commercial banks still have to repair their balance sheets and reinforce their capital base. The current slack in the economy is dampening price developments, an assessment which is confirmed by the monetary analysis. Consequently, the Governing Council believes that current interest rates remain appropriate.