Naturally, the Bank uses data supplied by other agencies as well. It also acquires information through other channels, such as both informal and formal meetings. For this reason it is simply wrong to claim that the Bank's resistance to easing its monetary stance is based on outdated information. BIS Review 27/2001  3  The Central Bank has declared that it will maintain tight money until unequivocal signs of a cooling in the economy begin to appear. Such indications have been emerging recently. For example, total business turnover has decreased. Retail turnover has contracted sharply and there has also been a decrease on the wholesale side. Turnover in manufacturing appears to be stable. However, turnover is still rising rapidly in the construction industry and at a considerable rate in the service sector as well. Although credit growth is still quite substantial, it has slowed down. In the Central Bank's opinion, the economy has now passed the most difficult phase of overheating and the time is ripe to ease the monetary stance somewhat, among other things to avoid a hard landing. The Board of Governors therefore decided today to reduce the rate of interest on its repurchase agreements with credit institutions by 0.5 percentage points. This change has been made in light of next year's lower inflation scenario alongside the slowdown in economic activity. Inflation prospects are within the reference limits stated in the joint declaration on inflation target issued today by the Government and Central Bank.
Great efforts are being made, involving significant sacrifices from broad sections of society; but they will eventually bear fruit and help to absorb the mass unemployment that is currently Spain’s most serious problem. To overcome the deterioration in solvency stemming from the economic crisis and the end of the unsustainable growth in construction and related lending activity, part of the banking sector has required an extensive clean-up, restructuring and recapitalisation. The main thrust of this process is already well-advanced, and this is having positive effects on the ability of our banks to raise funds abroad. Its completion will be a fundamental step in the recovery of confidence, activity and employment. We can affirm that the tensions experienced by the Spanish economy over the last 18 months have begun to abate, as a result of greater confidence in both the ability of the euro area to reform and in the adjustment drive of our economic policy. The deep-seated change in our trade balance, which will be manifest in a significant balance of payments  4  BIS central bankers’ speeches  surplus in 2013, is the prime example of the adjustment under way in the Spanish economy and of the competitiveness gains that are materialising. To conclude: you ask me what my prognosis is (not surprisingly, given who you are). I think you will understand if I reply that I still reserve my judgment. But, it was significantly worse a few months ago.