When making decisions about monetary policy in March, we were considering the possibility of continuing to reduce the key rate in the second quarter, if the economic situation develops in accordance with our forecasts. In March inflation went down to 4.3%, and according to assessments on 17 April inflation has already fallen year-on-year to 4.1%, which is very close to target. The rate of inflation going down more quickly gives us room to reduce the key rate as early as April. I would even suggest that at the next Board of Directors’ meeting, set to take place in a week, there may be discussion about lowering the rate from between 25 to 50 basis points. In general, when carrying out monetary policy, we will be sticking to a careful and considered approach, taking into account risks and uncertainties, including movement in the behaviour of oil prices, and we will be keeping monetary policy moderately tight in order to keep the rate of inflation at around 4%, and to foster the reduction in inflation expectations. The strategy of fiscal consolidation elected by the Ministry of Finance, along with the planned reduction in the budget deficit, will enable stabilisation of state finances. From the point of view of monetary policy, for us it is important that the elected strategy limits inflation risks arising from fiscal policy. Fiscal policy impacts on monetary policy and vice versa, therefore it is important for us to have a regimen of ongoing consultation on this issue.
The decline, as a percentage of GDP, in government consumption, social transfers and the interest burden is particularly noteworthy. As a result of the interplay between these fiscal targets and the macroeconomic setting described above, the budgetary policy stance can be described as practically neutral, if the estimations of the change in the primary structural balance included in the 2016 Budget Plan are taken into consideration. Clearly, if any of the risks to growth I mentioned earlier were to materialise, or financing costs were to increase, it would be more difficult to meet the government deficit commitments, and this must continue to be the main aim of Spanish budgetary policy. The enhanced credibility of Spanish economic policy in recent years is a result of the achievements in the area of fiscal consolidation; to maintain this credibility we need to continue and complete the process of correcting the fiscal imbalances. Conclusions The Spanish economy has made visible progress in the correction of the external imbalance, the deleveraging of households and firms, the redressing of fiscal balances towards levels more compatible with the sustainability of public finances and the restructuring and consolidation of the banking sector. Unemployment has also begun to decrease significantly. The reforms undertaken within Spain, along with the headway made in furthering economic and monetary union and the ECB’s highly expansionary monetary policy, have proven key to restoring confidence. However, the legacy of the crisis, eight years after its onset, is still burdensome as shown by the high levels of unemployment and foreign debt.