Bank deposits continue to grow, and there is little sign of a disproportionate increase in holdings of cash, so the low interest rates are not causing disintermediation. Similarly, there is little sign of excessive increases in real estate prices across the euro area as a whole, although some local markets have begun to see some stronger increases.
Taken together, the ECB’s current policy settings are appropriate and are clearly providing the support required to sustain the recovery. In providing that support, we are minimising the risk that the sluggish growth becomes entrenched as enduring stagnation and that inflation becomes deanchored. Monetary support for the recovery will continue until inflation is sustainably adjusting to our objective.