3 The decline in neutral policy rates likely reflects several factors, including aging populations, higher private saving, a greater demand for safe assets, and a slowdown in global productivity growth. The policy implications of the decline in neutral rates are important.
Results and challenges ahead The European strategy to deal with the crisis is delivering results, as interest rate differences between core and periphery countries have been reduced, programme countries have regained market access and the banking sector has been strengthened. However, many challenges remain. A key characteristic of the euro area economic recovery is the continuing decline in loans to the private sector.