In particular they have significantly expanded their balance sheets, and by making changes in their balance sheet structure they have taken various measures to make targeted investments in submarkets affected by liquidity shortfalls, maintain important credit relationships and ensure a functioning monetary policy transmission. 2  BIS central bankers’ speeches  We, too, have turned to innovative measures, to the targeted longer-term refinancing operations and the purchase of covered bonds and asset-backed securities which I mentioned earlier. For sure, in times such as these we need to be prepared. That is why the ECB’s Governing Council agreed at the beginning of November that the appropriateness of the monetary policy stance should be closely observed. In concrete terms, this means that if it should become necessary to further counteract the risks of a prolonged period of low inflation, the Governing Council intends to take additional unconventional measures within its mandate. Even if it is good to be prepared, one should beware of showing activism. There is no automatic mechanism to initiate further programmes. The ECB’s Governing Council has not decided on a target for the size of the balance sheet; it has rather unanimously expressed an expectation. A kind of mechanical expansion of the ECB’s balance sheet cannot be an end in itself. All of our decisions are to be evaluated against the background of current and medium-term inflation expectations. Consequently, we must continually analyse current price increases to identify the components which comprise the weaknesses in price developments.

Monetary conditions are the third factor we discussed when making our decision. Monetary conditions remain accommodative. Coupled with the Government’s support measures, this promotes lending across all segments, including the households, corporates, and small and medium-sized businesses. The annual growth of corporate lending reached its five-year high in October. The offering of corporate bonds has also been expanding. Mortgage lending continues to increase significantly. The portion of subsidised mortgage loans slightly contracted in October, but still equals nearly 30% of the disbursements. Concessional lending terms will remain in place until the end of 2021 H1. A number of programmes launched to support corporate lending have already been terminated. We are going to monitor how market interest rates and non-price lending conditions will be adjusting in this situation. The current economic situation is another essential factor influencing our decisions. The epidemiological situation has worsened today, which expectedly has a restraining effect, but this impact is currently considerably lower than in 2020 Q2. Although the situation is not uniform across industries, the decrease in economic activity is not as drastic as in spring and early summer when large-scale anti-pandemic restrictions were in place. Furthermore, companies and households have already adjusted to the changed environment to a certain extent, including additional requirements. Therefore, we may rather talk of a pause in recovery processes. We can observe that economic trends and financial flows are changing unevenly. They have returned to normal or even exceeded this level in a number of sectors, while other industries are far from a complete recovery.