That compensation is paid for by those seeking to spend more today than their current income, such as people buying houses, or firms investing in new capital, who in return will not consume all their income in the future to repay the debt. There are two parts to interest payments – the real component which is the extra amount of goods and services you can buy in the future relative to today and the inflation component which compensates for the changes in the prices of goods and services in the future. Long-run nominal interest rates have been falling across major advanced economies for more than three decades. In major part, this is due to the success of central banks in taming inflation. The expected inflation rate and the inflation risk premium incorporated into long-run interest rates have fallen. Yet changes in expected future inflation that are in turn realised are benign for savers – it is changes to the amount of goods and services that can be purchased in the future that matter, not changes in nominal prices. But it is not just long-term nominal interest rates which have been declining; longterm real interest rates have also fallen. Factors beyond monetary policy have played a role in driving real rates lower, which are less benign. There has been a secular decline in productivity growth rates in advanced countries, and increased pessimism about future growth. With lower expected return on capital, firms are more reluctant to invest.
We assume that January’s indicators on consumer lending recovery will probably exceed those on income recovery, and if any signs of future overheating emerge, we may start already this year to increase buffers for newly issued consumer loans in order to prevent an inadequate rise in households’ debt load as compared to income growth. I would like to especially emphasise once again the fact that the decision to release buffers, rather than extend the regulatory easing is a matter of principle. Macroprudential buffers were introduced in the regulation not so long ago, and they are part of our countercyclical policy. What does this mean? This means that these capital buffers are accumulated when the environment 2/7  BIS central bankers' speeches  is favourable and are released to be used in crisis periods. Today, we are facing exactly such a situation. In contrast to regulatory easing, macroprudential policy does not camouflage problems, yet delivers more comfort to banks. The second topic I would like to dwell on is that we are going to return to our plan for curtailing irrevocable credit lines for systemically important banks. We announced this policy before the pandemic, but in spring 2020, amid all that turbulence in the market, we temporarily eased the requirements for systemically important banks’ compliance with the liquidity coverage ratio and made irrevocable credit lines granted by the Bank of Russia more affordable, postponing the termination of this instrument.