monetary policy should remain accommodative ”. 3 ) what about the risks? i talked earlier about the risks of doing nothing : we need to take action in order to bring inflation back up towards 2 %. that said, we also need to keep a close eye out for any possible negative side - effects of our monetary policy, notably for financial stability. we are actively monitoring the financial cycle, including in france where the task falls to the haut conseil de stabilite financiere ( high council for financial stability ), set up in 2013 : i will be taking part in its 8th meeting at the finance ministry tomorrow. for the time being, there are no signs of any bubbles forming in the main financing markets : on the whole, developments in the equity markets appear in line with corporate profit forecasts, while evolutions in bond yields also seem consistent with the outlook for inflation and growth. nor are there any signs of excessive credit growth in the financial system. nevertheless, we remain vigilant over all aspects of the current macroeconomic and financial environment. in the last hcsf communique in december 2015, for example, we indicated, on the subject of the property market, that “ the price adjustment in the residential market since 2012 appears appropriate, whereas commercial real estate prices remain high ”. we are ready, when needed, to take action with macroprudential measures, to prevent and mitigate any systemic risks that might arise. monetary policy is thus doing a great deal to counter weak inflation and support economic activity – it is our duty and we will continue to do so with steadfast resolve : we are consistent in our objective, ready to act with the right instruments, and alert to any possible risks. however, i would also like to stress that “ monetary policy cannot be the only game in town ”. other economic policies also have a role to play. this is precisely what the members of the g20 reiterated in shanghai on 27 february : “ monetary policies will continue to support economic activity and ensure price stability, consistent with central banks ’ mandates, but monetary policy alone cannot lead to balanced growth ”. where there is sufficient margin to do so, fiscal policy must support demand – this is not currently the case in france, but it is in other countries in europe. moreover, structural reforms remain absolutely vital in france, to encourage creations of jobs and of businesses and thus bring the economy back to full potential. our country can ’ t wait any

on the one hand, and the risk of an unanchoring of expectations, on the other. a ) first, a certain number of factors are currently contributing to low inflation. primarily, the euro area is faced with deflationary pressures associated with a series of economic shocks : firstly, the fall in oil prices, from over eur 80 per barrel in mid - 2014 to eur 34 in early march 2016, or more than 2. 5 times lower, as well as the decline in commodity prices ; secondly, the slowdown in growth in emerging economies and chiefly china ; and, lastly, inadequate growth in the euro area with persistently high unemployment, which curbs wage rises and weakens demand and price growth. moreover, structural factors, such as the ageing population, are likely to exert downward pressure on the “ natural ” interest rate, a term coined by the swedish economist knut wicksell over a century ago. this rate can be defined as the interest rate consistent with the full employment of the factors of production. in this case, in order to achieve the right balance between savings and investment, markets rates must come down too. in normal times, central banks cut their key rates, and this passes through to the yield curve. however, in order to deal with the financial crisis, the ecb like other central banks have brought their key interest rates to very low levels, around zero. this means that our traditional monetary policy tools had to be supplemented by other instruments, known as non - standard instruments, in order to reach our prices stability objective. i will return to this point later. b ) the second challenge, which stems from the first, is the risk of an unanchoring of expectations, which would make it harder for us to achieve our 2 % target again. indeed, if inflation stayed too low for too long, economic agents may revise downwards their inflation expectations, which would create second round effects. lower inflation expectations influence economic agents ’ price - and wage - setting behaviour, which in turn keeps inflation low. it can even raise the risk of deflation, defined as a cumulative process of falling prices, including those of assets, or even wages and production, as the world economy experienced in the 1930s or japan partially underwent in the 1990s. such deflationary dynamics are not at play today ; but that is why our inflation target is symmetrical. we consider too low inflation to be just as costly as too high inflation. and, therefore,