First challenge: Risks of a prolonged period of low inflation Let me start with the first challenge namely the risks associated to a prolonged period of low inflation. Over the past years, we have seen a pronounced decline in inflation rates. Inflation stood at 3.0% in late 2011, and has dropped since then to a mere half percent in May 2014.
2  BIS central bankers’ speeches  It is fair to say that a decline of this magnitude was not anticipated, neither in the prices of financial assets nor in the forecasts of international economic institutions. To give you an example, Eurosystem staff inflation projections for 2014 were revised significantly downwards over the recent months.