Clearly the lower surpluses imply a smaller fall in the debt-to-GDP ratio and higher gross financing needs. However, the smoothing of interest can mimic the baseline high surplus case both on the path of the debt-to-GDP ratio and in terms of gross financing needs.
In keeping with these anticipations, we also re-confirmed our forward guidance in its original formulation. Over the past two years our interest rate cuts were transmitted only unevenly across euro area countries, due to the fragmentation of financial markets along national borders. To address this problem, we adopted a series of non-standard measures.