In particular, because even though expectations have improved in general, they have done so by anticipating a better future economic performance rather than by current results. In this context, we have held the Monetary Policy Rate (MPR) at 2.5% since May and we expect that, if the baseline scenario comes true, we will keep the monetary impulse near its current levels, to begin withdrawing it only once the economy begins to close the activity gap. Anyway, it is important to carefully monitor any downward deviations of inflation in the short term, because in the context of a weak economy, low inflation and some measures of medium-term inflation expectations remaining somewhat below 3%, the convergence of inflation could be affected, in which case it would be necessary to make the already expansionary monetary policy more so. The financial conditions have helped to shape the macroeconomic scenario described above. Borrowing remains accessible and inexpensive, in line with the orientation of monetary policy. The local financial market has seen no major disruptive events and the internal and external payment systems have functioned normally. Non-financial companies maintain their levels of profitability and indebtedness, while the increase in household debt is concentrated in mortgage credit, which covers long periods, at fixed rates and with a prudent loan-to-value ratio, which keeps the financial burden fairly constant. For its part, in the residential real estate sector, sales of new homes stabilized and prices continued to rise, albeit modestly. Nonetheless, some financial risks identified in past reports are still important.
But if this is the case, then there can be no cherry-picking, no “Europe a la carte”, no “Rosinenpickerei”. It has been nearly ten years since the global financial and economic crisis. We have come sa long way, but there are still challenges ahead of us for the ten years to come. Yet the challenges for the financial industry are gradually changing in nature: they could shift from adapting to the regulatory or monetary policy environment to reflecting on new business model strategies. In this regard, the expected strengthening of the economic recovery will hopefully make the path smoother. Austerity – or rigour – will remain necessary, but innovation will be the game changer. Thank you for your attention. 4/9  BIS central bankers' speeches  Slide 2  5/9  BIS central bankers' speeches  Slide 3  6/9  BIS central bankers' speeches  Slide 4  7/9  BIS central bankers' speeches  Slide 5  8/9  BIS central bankers' speeches  Slide 6  9/9  BIS central bankers' speeches