The context of low inflation and slow growth has given rise to a broad consensus on the ECB Governing Council. This is namely the need to maintain a significant monetary policy stimulus that can help anchor the economic expansion and ensure that inflation is on a sustained path towards the medium-term reference. Since the end of the asset purchase programme (last December), the main tool for maintaining the monetary stimulus and anchoring agents’ expectations has been interest rate policy and forward guidance. In June 2018, then, it was determined that policy interest rates would hold at current levels until, at least, the summer of 2019 and, in any event, until inflation should converge in a sustained manner towards levels compatible with price stability. That is to say, our forward guidance has twin strands: the first is linked to a specific date until which the Governing Council commits not to raising interest rates; and the second makes these increases conditional upon convergence towards our medium-term inflation aim. Forward guidance has also been strengthened by the maintenance of the policy to reinvest the principal payments from maturing securities purchased under the asset purchase programme for an extended period of time past the date when the Council starts raising the key ECB interest rates. However, in light of the weakness of the macroeconomic figures, the decline in inflation expectations and the conjunction of numerous sources of risk, communication by the ECB Governing Council has progressively been adjusted towards a more accommodative monetary policy.

4/16  The economic literature fairly unanimously considers that trade openness in the world economy in recent decades has been fundamental for global growth and social well-being.2 Against this background, the proliferation of protectionist measures is one of the greatest threats to the world economy. Along with their direct repercussions on global activity, such measures generate additional adverse effects through their impact on global confidence. And these effects are so far proving significant. Accordingly, any future proliferation of additional protectionist actions, further undermining confidence and affecting financial conditions (and, therefore, business investment), might ultimately impact global GDP severely.3 Turning to Brexit, it is over three years since the UK referendum on EU withdrawal. Doubts persist over how the exit process will be resolved, and Brexit remains a primary source of uncertainty for global economic activity and, especially, for the rest of the EU. After the latest developments, including the new prime minister’s decision to suspend parliament until midOctober, the markets now consider a hard Brexit to be more likely. On the simulations available, a Brexit with a trade agreement would have a relatively limited effect. But the adverse consequences of a no-deal Brexit would be significant, especially for the UK economy.4 Against this background of uncertainty, UK GDP has already posted negative growth in the second quarter of this year. The economic situation in the euro area: economic slowdown and low inflation The more open European and East Asian economies have been those most affected by these international trade developments.