. 5 −0. 5 july'23 oct.'23 jan.'24 apr.'24 july'24 oct.'24 jan.'25 apr.'25 july'25 oct.'25 sources : based on ecb, bloomberg and lseg data. ( 1 ) the figure shows the actual ( solid blue line ) and the expected ( dashed blue line ) one - year real interest rate as measured on 30 may 2024. it also shows estimates of the real natural interest rate : its median ( red line ) and the 10th - 90th percentiles ( grey band ). for further details, see chapter 3, annual report for 2023, 2024 ( only in italian ). the decisions of the us federal reserve will be a factor to be taken into account, not a constraint, during monetary easing. a tighter than expected us monetary policy stance could lead to a depreciation of the euro against the dollar and create inflationary pressures. empirical studies suggest, however, that this effect would be overcome by the negative impact that the us monetary tightening would have on global demand and financial conditions, and therefore on euro - area inflation. when defining the path of policy rate cuts, it should be borne in mind that prompt and gradual action contains macroeconomic volatility better than a tardy and hasty approach. unlike in the past, the decline in the near future in policy rates will be accompanied by a reduction in the monetary policy portfolios of securities, which will lead to a sharp contraction in outstanding liquidity and a consequent tightening impulse in the credit market. a gradual normalization of the eurosystem ’ s balance sheet after the expansion of recent years is certainly appropriate. however, it is essential that this process does not interfere with the monetary policy stance and that the banca d ’ italia the governor ’ s concluding remarks annual report 2023 adjustment is carried out without creating liquidity shortages in the system or fragmentation in the transmission of monetary impulses. the review of the monetary policy operational framework was concluded last march. the governing council decided that it will continue to implement its monetary policy action through the rate on the deposit facility. under the new framework, it is essential that liquidity remains abundant to ensure a firm control of short - term market rates. the liquidity needs will be partly met through a structural portfolio of securities and through longerterm refinancing operations. i believe that these components should be given a significant weight in order to

ignazio visco : financial stability in a world of very low interest rates keynote speech by mr ignazio visco, governor of the bank of italy, at the 43rd general assembly of the geneva association, rome, 9 june 2016. * * * since the 1980s we have been observing a marked downward trend in nominal interest rates in the major advanced economies. this decline is explained by lower inflation and inflation risk premia, and by a reduction of real interest rates. in these countries real long - term yields have fallen on average from around 5 percent in the early 1980s to about 2 percent before the financial crisis, and to approximately zero percent today. more recently, very low or even negative interest rates mainly reflect the slack in the economy and excessively low actual and expected inflation. the euro area, in particular, is still slowly recovering from two consecutive financial crises and a long recession. real gdp has only recently returned to the 2008 level and cyclical positions continue to differ across member states. inflation remains well below the levels consistent with the ecb definition of price stability : it has now been below 1 percent for almost three years and in the last few months it has turned negative once again. core inflation ( which excludes the more volatile components ) has not exceeded 1 per cent over the last two years ; it reached a historical minimum ( 0. 6 % ) at the beginning of 2015 and stands only slightly above it in the latest readings. the risk of a de - anchoring of inflation expectations has become material since mid2014 and is still high, although it declined at the beginning of 2015 following the announcement by the ecb governing council of its public sector purchase programme. while these considerations indicate that the current low level of interest rates is not an arbitrary choice of central banks, the risks posed by a protracted, very accommodative monetary policy need to be monitored carefully. and so they are. very low ( or negative ) interest rates for too long raise fears that they may be a source of financial risks by fuelling asset price misalignments and endangering the profitability of financial institutions. the risk of asset price misalignments ( or “ bubbles ” ) is strictly connected to the incentives for an excessive “ search for yield ” that an environment of low nominal and real interest rates creates for investors and financial intermediaries alike. at present, indicators of imbalances in housing and credit markets do not point to increasing vulnerabilities in the euro