In this sense, the fall in inflation – by boosting the purchasing power of our citizens – has acted as an automatic stabiliser at a time in which the economic conditions were deteriorating. Inflation expectations are a good measure of the degree to which the free fall in the economy and the dis-inflationary process could come to feed upon itself.
They have remained stable around levels consistent with our definition of price stability. The economy, too, is showing signs of stabilisation. After the strongly negative readings recorded earlier this year, economic activity in the second quarter is estimated to have declined by 0.2% relative to the previous quarter. In the period ahead, we expect to see a very gradual recovery.