movements, in turn, reduce investment opportunities and risk diversification across countries. these trends could exacerbate the current downward pressure on the equilibrium interest rate, 4 as a result of population ageing, sluggish productivity5 and an increase in the demand for risk - free assets which has outstripped supply. more broadly, commercial and financial fragmentation risks fraying the multilateral order that has underpinned global economic development since the end of the second world war and fostered peace among the leading powers. the effects of this would extend beyond economics and the financial sphere. given the openness of the european and italian economies, geopolitical divisions pose significant risks. it is in our interest to vigorously defend the progress made so far in global integration and in multilateral dialogue. at the same time, a far - sighted and pragmatic approach obliges us to find ways to operate effectively in a less open world, thereby reducing the vulnerabilities stemming from the new global situation. there could be growth opportunities for the least - developed regions in europe, if they are able to intercept the investment flows in search of market outlets to relocate some stages of the production process. analyses by the bank of italy and other central banks6 suggest that european companies, especially those exposed to the chinese economy, are reorganizing their production and their supply chains. for italy, a quantification of the potential losses from specific input shortages due to geopolitical fragmentation is discussed in a. borin, g. cariola, e. gentili, a. linarello, m. mancini, t. padellini, l. panon and e. sette, ‘ inputs in geopolitical distress : a risk assessment based on micro data ’, banca d ’ italia, questioni di economia e finanza ( occasional papers ), 819, 2023. in the language of economists, the long - run equilibrium interest rate is also referred to as ‘ natural interest rate ’. a. gerali and s. neri ‘ natural rates across the atlantic ’, journal of macroeconomics, 62, 2019 ; also published in banca d ’ italia, temi di discussione ( working papers ), 1140, 2017. m. bottone, m. mancini and t. padellini, ‘ navigating fragmentation risks : china exposure and supply chains reorganization among italian firms ’, banca d ’ italia

to the decisions of central banks, which react to macroeconomic conditions, but rather reflects the enduring underlying weakness of the economy and a possible market response to a resurgence of fisherian debt deflation. we are still quite far from the “ normal ” economic conditions to which we ought to return ( also in view of the structural factors that could explain lower growth rates worldwide than in recent decades ). the introduction of a two - tier system for bank reserve remuneration – which was also adopted in other jurisdictions – is intended to prevent the reduction in official rates to negative values from having, beyond a certain level, the undesirable side effect of impairing banks ’ ability to grant credit and, therefore, from being transformed into a restrictive factor. nevertheless, encouraging greater trading between banks seeking higher returns on their liquidity may spark tensions on money market rates, a risk that is countered by the calibration chosen but one which must still be carefully monitored. in its forward guidance, the governing council confirmed its determination to respond symmetrically to inflation developments, in other words to intervene when inflation falls below the target with the same determination as when it rises above it. the aim is to avoid a further downward revision of inflation expectations, or the resurfacing of the deflation risks we successfully countered three years ago, whilst simultaneously guaranteeing financial conditions capable of supporting the economic cycle. monetary policy resolutely pursues the objective of price stability. to achieve the maximum benefits from our action, the governing council unanimously agrees that, given the slowdown in production and the significant downside risks that weigh on the outlook, fiscal policy must make a more incisive contribution to strengthening aggregate demand. during this phase, the countries that have room to intervene can play an important stabilizing role ; those with a high public debt must prioritize a rebalancing of expenditure towards measures that are better able to support growth, such as public investment, and to reduce the tax burden on businesses and employment. * * * in conclusion, i think that the package of measures we adopted was necessary and appropriate to counter the cyclical risks and the weak inflation outlook, and fully in line with our previous decisions. in the past, i have always avoided giving my opinion of monetary policy decisions immediately after governing council meetings. i have decided to do so today, a few weeks after the last decisions were taken, mainly because of the recent media attention given to the discussion that followed that meeting. intense and