also update our risk assessment. even now, 2 / 5 bis - central bankers'speeches it seems clear that the recent events in the middle east – terrible events – have increased the uncertainty of the medium - term outlook. overall, during the last few months, inflation in the euro area has fallen significantly. in october, the headline inflation rate slowed to 2. 9 %. this is encouraging. nevertheless, while the inflation curve currently looks a bit like the matterhorn – or, as it is called in italy, monte cervino – i do not expect this steep decline to continue over the coming months. statistical effects, particularly base effects, are currently exerting a strong influence on the monthly data. events that happened twelve months ago are having an impact on the year - on - year rate of inflation. even if energy prices remain where they are, i expect the inflation rate to rise again somewhat. for some months to come, the road ahead will probably be a bumpy one with many ups and downs. indicators of underlying inflation show that its dynamic is still quite strong. for example, in october, core inflation stood at 4. 2 %. this is the inflation rate excluding energy and food. in other words, now that the disinflationary effect of lower energy prices has faded away, we are faced with the most difficult part of our journey forward. that is to say, our job is not done yet. in particular, it would be a mistake to loosen our monetary policy stance too early. premature easing would jeopardise the timely return of inflation to our target of 2 %. and this timely return is important for keeping medium - to - long - term inflation expectations anchored at levels consistent with price stability. if our actions raise doubts about our determination, economic agents will increasingly expect inflation rates to persist above target and will adapt their behaviour accordingly. their price - setting behaviour or their wage demands, for example. now we need the patience to wait for the full effect of policy tightening on inflation to materialise. we expect the main effect on inflation to take hold in 2024. this is due to the time lag of monetary policy transmission. in any case, we must maintain our current restrictive policy stance until we are certain that price stability will return on a lasting basis. 3. 2 price stability is our guiding star one reason why the final mile on the road to price stability is considered to be the toughest is the growing public opposition to a restrictive monetary stance

the ratio of debt to 2 / 4 bis central bankers'speeches assets close to its highest level in two decades on an overall basis, and this is also true for speculative - grade and unrated firms. and whereas previously, mostly high - earning firms with relatively low leverage were taking on additional debt, analysis of detailed balance sheet information indicates that firms with high leverage, high interest expense ratios, and low earnings and cash holdings have been increasing their debt loads the most. historically, high leverage has been linked to elevated financial distress and retrenchment by businesses in economic downturns. regarding corporate bonds outstanding, recent years have witnessed little change in the relative shares of investment - grade bonds and high - yield bonds. credit quality has deteriorated within the investment - grade segment, where the share of bonds rated at the lowest investment - grade level has reached near - record levels. as of mid - 2019, just over half of investment - grade corporate bonds outstanding were at the lowest end of the investment - grade segment. in comparison, the share of high - yield bonds outstanding that are rated “ deep junk ” has stayed flat at about one - third over the past few years, well below the financial crisis peak of 50 percent. in an economic downturn, widespread downgrades of these low - rated investment - grade bonds to speculative - grade ratings could induce some investors to sell them rapidly — for instance, because lower - rated bonds have higher regulatory capital requirements or because bond funds have limits on the share of non - investment - grade bonds they hold. this concern may be higher now than in the past, since total assets under management in bond mutual funds have more than doubled in the past decade, and these funds now hold about one - tenth of the corporate bond market. the redemption behavior of investors in these funds during a market correction is unclear. further down the credit quality ladder, there has been sizable growth in leveraged lending, accompanied by a notable deterioration in underwriting standards. net issuance of leveraged loans to risky borrowers grew rapidly last year and boosted leveraged loans outstanding to a level exceeding $ 1 trillion overall, although the pace of issuance has slowed more recently as the interest rate environment has shifted. while leveraged loans have traditionally had important investor protections, covenants for leveraged loans issued in the past few years have weakened dramatically, and they often include features that increase opacity and risk. a substantial share of the leveraged loans are packaged in collateralized loan obligations ( cl