some time ago by the governing council and, taken together, are an appropriate and proportional response to the worsening macroeconomic outlook for the euro area. in previous meetings, there was already broad agreement that the outlook for economic activity and prices was disappointing. in july, we reiterated our determination to intervene decisively if the medium - term inflation outlook failed to improve. over the last few months, the signs of economic slowdown and weakening inflation have instead intensified. geopolitical tensions, including those relating to trade tariffs, and the sharp decline in international trade recorded in the last few quarters have continued to weigh on firms ’ confidence, on investment and on industrial production. the assessments of those who, one year ago, expected that the weakening in economic activity would prove temporary and would eventually subside have been shown to be increasingly optimistic. the slowdown was substantial for german and, though less so, italian industrial production, but it would be naive to underestimate its scope by considering it an asymmetric shock. if the worsening in the manufacturing sector proves to be persistent, it will inevitably reverberate across the other sectors of the economy. this is confirmed by the most recent data, which point to an area - wide slowdown in activity in the service sector, especially in germany. in a slowing economy, it is no surprise that inflation has remained very moderate and well below the objective of a close to 2 per cent annual increase in consumer prices in the euro area ; even with all the margins of uncertainty, the forecasts indicate that inflation is expected to remain weak over the next two years. we must counter the significant risk that the economic slowdown and the low level of inflation translate into a permanent reduction in inflation expectations or a re - emergence of the threat of deflation. the analyses conducted by the bank of italy clearly demonstrate this risk, regardless of the measure of expected inflation used : similar trends have been observed in the expectations derived from the financial markets, which may be affected by excessive reactivity on the part of investors, and in those obtained from surveys of professional forecasters, firms and households. a very recent study by bank of italy economists finds that the medium - and longterm inflation expectations in the ecb ’ s survey of professional forecasters are now much more susceptible to negative surprises to current inflation than they were in the past. this is a finding that confirms the one that our researchers had already obtained based on inflation expectations derived from inflation swaps. by all measures,

nestor a espenilla, jr : good governance in the pursuit of mandates speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the institute of corporate directors 2018 mid - year economic briefing fellows ’ breakfast roundtable, manila, 17 july 2018. * * * icd chairman francis estrada, chief executive officer dr. alfredo pascual, business, industry and government leaders, vanguards of good governance, ladies and gentlemen, good morning. i thank the institute of corporate directors ( icd ) for this opportunity to share the corporate governance initiatives championed by the bsp for itself as an institution, in delivering on our price stability mandate, in setting an example and in giving guidelines to those under our supervision. a plethora of literature on central banking emphasizes the importance of credibility in shaping monetary policy and in guiding the market. credibility too is important for effective regulation. it is notable that even in everyday personal relationships, credibility is built on established competence and character. on consistency. on integrity. on good self governance. at the bsp, we believe that good governance should flow from the top. by this, i am not only espousing decisive leadership. rather i emphasize that to elicit good governance, we must ourselves practice good governance. for it is only then that we will have the credibility and moral ascendancy to elicit the public ’ s and the market ’ s trust and guide expectations, and it is only then that we could effectively require good governance from our supervised entities. good governance in the bsp as early as 2009, the bsp adopted a principles - based governance framework. in 2015, the bsp was recognized as an island of good governance by the icd and as of 2017 [ vetted by the development academy of the philippines ( dap ) ], two out of our five governance principles : accountability and transparency and strategic direction were assessed at “ high integration. ” three of our other principles — integrity, ownership and voice ; and responsiveness — were rated at “ sustainable ”. these principles are set forth in our 3 - year governance roadmap for 2017 to 2019 and are integrated into the bsp ’ s decision - making systems, processes, and work ethic so that we can give the best possible service to our country and to our fellow filipinos. in the bsp, we affirm that good governance is not just about compliance