This interpretation is less benign than the first one I advanced. If one interprets long-term real forward rates as a measure of the equilibrium rate, the comparison of these persistently negative rates with the growth rate of potential suggests that the economy may be dynamically inefficient and expected to remain so for a very long time.
Turning to the monetary analysis, the underlying pace of monetary expansion continues to be subdued. In September the annual growth rate of M3 decreased to 2.7%, from 2.8% in August. Monthly outflows from M3 reflected to some extent the reversal of portfolio shifts into the most liquid components of M3.