. the euro - area configuration, with the ecb - ssm in a position to top up national measures, goes in the direction of assuaging political economy concerns of this kind. the punch bowl may be taken away by someone other than the host, namely a supranational authority. furthermore, the fact that all individual initiatives must pass the collective examination of the esrb and / or the governing council limits the scope for strategic choices by individual countries. map is certainly going to be “ an adventure more than a job ”, and it will entail a lot of adaptation and learning by doing. here practice must necessarily come before theory. but since map can play a crucial role in resolving current economic difficulties, and the euro area has a sound institutional framework in place to handle it, our practice should begin in earnest, and sooner rather than later. 5. what could map do today, and how? these reflections suggest that map could make a considerable difference in the euro area. it is likely to be a powerful instrument ; it reintroduces a degree of flexibility that could compensate for the lack of national monetary policy frameworks ; and it can relieve monetary policy of some of its burden. the question is how to relate this structural discourse to our current impasse. as we know, the euro area is not in good shape : inflation is too low, growth is weak, mp is stretched and affected by financial segmentation, banks ’ balance sheets are still strained, credit is scarce. credit growth is weak across the area, although the underlying causes might differ across countries, and the need to stimulate credit supply accordingly ranks high on policy - makers ’ agenda. 19 thus, the dilemma faced by map today is how to improve the financing conditions without further undermining banks ’ resilience. an alternative explanation for this predictive relation is that rising house prices relax households ’ borrowing constraints, allowing them to take on more debt. the two hypotheses cannot be disentangled by looking at plain correlations. miles and pillonca ( 2008 ) suggest that expectations of capital gains played a significant role in driving housing credit in spain, sweden, belgium and the uk before the crisis. draghi ( 2014 ) clarifies that the ultimate objective of the comprehensive assessment is to address capital constraints on credit supply. bis central bankers ’ speeches how should this dilemma be resolved? the set of recent policy initiatives taken and discussed within the esrb suggests that decision - makers have reached a

i will continue to watch a whole range of indicators closely. finally, let me briefly discuss monetary policy. as i have noted, policy is currently restrictive, and my baseline expectation is that disinflation will continue without a broad economic slowdown - though such an outcome is not assured. in considering the appropriate path of monetary policy, i am guided by the fomc's dual mandate of maximum employment and price stability. after the march fomc meeting, the committee said that it " does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. " 10 after that meeting, we also published the summary of economic projections, which summarizes the forecasts of fomc participants. most fomc participants expect that it will be appropriate to begin lowering the federal funds rate sometime this year. my own expectation is consistent with that ; if disinflation and labor market conditions proceed as i am currently expecting, then some lowering of the policy rate this year would be appropriate. however, i will remain attentive to the totality of the data and be prepared to change my economic and policy outlook if conditions change. 1 the views expressed here are my own and are not necessarily those of my colleagues on the federal reserve board or the federal open market committee. 2 for explaining core pce inflation generally, see adam hale shapiro ( 2022 ), " decomposing supply and demand driven inflation, " working paper series 2022 - 18 ( san francisco : federal reserve bank of san francisco, october ; revised february 2024 ), available at https : / / doi. org / 10. 24148 / wp2022 - 18. with regard to the manufacturing sector specifically, recent work by the federal reserve board staff focused on manufacturing production and producer price indexes and used additional supply information from the census bureau's quarterly survey of plant capacity utilization. that research found a roughly 50 – 50 split between supply and demand. see robin braun, aaron flaaen, and sinem hacioglu hoke ( 2024 ), " supply vs demand factors influencing prices of manufactured goods, " feds notes ( washington : board of governors of the federal reserve system, february 23 ). 5 / 6 bis - central bankers'speeches 3 see olivier j. blanchard and ben s. bernanke ( 2023 ), " what caused the u. s. pandemic - era