For example, a forecast for sustained inflation above the objective would imply an increase in interest rates and tightening of financing conditions, to help moderate inflation. On the other hand, sustained lower inflation than the objective range implies subdued economic performance and would require reduction in interest rates to raise demand and stimulate economic 6  activity.
Lending rates for very small loans, which can be taken as a proxy for loans to small and 1/4  BIS central bankers' speeches  medium-sized enterprises (SMEs), have declined by almost 190 basis points. The significant improvement in funding conditions for SMEs is especially encouraging as they provide two-thirds of total private sector employment in the euro area.