2  Estimation of an error-correction model in which the projection of the NFC lending rate depends on the lagged OIS3M and OIS2Y 3 April 2023 euro area bank lending survey (europa.eu), released on May 2, 2023  Page 7 sur 14  By the way, the growth of loans in France remains significantly higher than in the euro area average. Overall, evidence shows a quick and smooth pass-through of ECB decisions to broad financing conditions. But this is only the first part of the transmission to tame inflation. II. Transmission to the real economy and the decline in inflation In the textbook theory, tighter financial conditions moderate aggregate demand. Monetary policy also affect inflation through the exchange rate channel, but this is beyond the scope of my speech today. According to recent ECB work based on a set of models that complement each other,4 our policy tightening is estimated to lower inflation by around 2  4  Darracq-Paries, Motto, Montes-Galdón, Ristiniemi, Saint Guilhem and Zimic, A model-based assessment of the macroeconomic impact of the ECB’s monetary policy tightening since December 2021, ECB Economic Bulletin, issue 3/2023. Page 8 sur 14 percentage points as a mean over the period 2023-2025. But these estimates call for two caveats: - they vary substantially across models, and are lower in semi-structural models, which unlike structural or DSGE models, incorporate more inertia in consumption and less influence of forward-looking inflation expectations.
Since our forecast of June 2001, the world economy has moved towards recession. Short-term inflationary pressures have subsided considerably. On the assumption that the three-month Libor rate will remain stable at 1.75% during the next three years, inflation should amount to 0.9% in 2002, move up to 1.3% in 2003 and reach 1.5% in 2004. The fluctuations in the anticipated 2002 inflation rate are due to basis effects that do not reflect the inflationary trend. Inflation is expected to remain within the range of price stability throughout the forecasting period. From mid-2002 on, however, it will follow a slight upward trend through the rest of the forecasting horizon. This slight rise in anticipated inflation is attributable to two factors. First, the world economy will recover in due course. Second, Swiss monetary policy at a constantly low interest rate - which is currently 1.5 percentage points lower than in the June 2001 forecast - will tend to have an increasingly expansive effect as time passes. These two factors combined will cause inflation to rise somewhat over time. Our forecast is based on the assumption that the US economy will remain in recession until mid-2002 and will subsequently gradually return to its potential growth path. In Europe, the economy will presumably stagnate until mid-2002 and pick up momentum afterwards. We expect the US dollar to remain roughly at its current level vis-à-vis the euro. The forecast assumes that today's relatively low oil prices will eventually climb back slightly.