All this continuously affects the process at hand and the Euro area of today may well be quite different from that of 1999. The second important source of uncertainty concerns the state of the economy. Again the division can be made between aggregate uncertainty and uncertainty at the country level. Among experts the opinion is not always unanimous concerning the state of the economy.
While lower rates contributed to greater household financial vulnerabilities, enhanced macroprudential policies helped to mitigate these and will continue to do so. As the economy approaches full capacity, a higher policy rate in pursuit of our inflation target also serves to reinforce efforts to mitigate financial system vulnerabilities.