profits increase by more than expected. upside risks to inflation also stem from the heightened geopolitical tensions, which could push energy prices and freight costs higher in the near term and disrupt global trade. moreover, extreme weather events, and the unfolding climate crisis more broadly, could drive up food prices by more than expected. by contrast, inflation may surprise on the downside if low confidence and concerns about geopolitical events prevent consumption and investment from recovering as fast as expected, if monetary policy dampens demand more than expected, or if the economic environment in the rest of the world worsens unexpectedly. greater friction in global trade would make the euro area inflation outlook more uncertain. financial and monetary conditions market interest rates in the euro area have declined further since our october meeting, reflecting the perceived worsening of the economic outlook. although financing conditions remain restrictive, our interest rate cuts are gradually making it less expensive for firms and households to borrow. the average interest rate on new loans to firms was 4. 7 per cent in october, more than half a percentage point below its peak a year earlier. the cost of issuing market - based debt has fallen by more than a percentage point since its peak. the average rate on new mortgages, at 3. 6 per cent in october, is about half a percentage point lower than at its highest point in 2023, even though the average rate on the outstanding stock of mortgages is still set to rise. 3 / 4 bis - central bankers'speeches bank lending to firms has gradually picked up from low levels, and increased by 1. 2 per cent in october compared with a year earlier. debt securities issued by firms were up 3. 1 % in annual terms, which was similar to the increase in the previous few months. mortgage lending continued to rise gradually in october, with an annual growth rate of 0. 8 per cent. in line with our monetary policy strategy, the governing council thoroughly assessed the links between monetary policy and financial stability. euro area banks remain resilient and there are few signs of financial market stress. financial stability risks nonetheless remain elevated. macroprudential policy remains the first line of defence against the build - up of financial vulnerabilities, enhancing resilience and preserving macroprudential space. conclusion the governing council today decided to lower the three key ecb interest rates by 25 basis points. in particular, the decision to lower the deposit facility rate – the rate through which we steer the monetary policy stance – is based

positioning ourselves a notch or two higher on global financial markets and bringing to ourselves a share of the total incomes generated by the 270 trillion dollar global derivatives market. in addition to the scope that may thus be given to our financial market by fetching international derivative trades to our shores, we will be gradually building up, among business operators, core skills that accompany the development of the derivatives market in general. this is the context in which this workshop and others that will follow it assume a relevance of their own in defining a more diversified future profile of our financial market. i can then look forward to a strong spirit of innovation in developing financial market instruments in this context. this process will no doubt be reinforced by continuous training and the experience gained by our operators through actual operation on the markets. having encouraged you thus to engage in derivative trading to give greater scope to financial business undertaken from mauritius, we can consider the positive spinoffs this will result in as we progress in this area in the future. let us stop and take a look at the challenges of persevering in this line of action. it is generally acknowledged that derivative markets have a positive fallout on underlying markets in so far as they help to redistribute risk and increase market efficiency and liquidity. derivatives have become an indispensable part of a modern financial system and will so remain so long as uncertainties will have to be provided for. in the context of new capital standards being introduced currently for banks, credit derivatives are seen as risk mitigating factors against portfolio risk to the extent they serve to lower capital charges of banks. healthy financial sector development is thus supported by this activity if only by increasing the scope for risk management. the resulting control over volatility in portfolios of financial institutions has, in turn, the effect of improving the risk appetite of market participants for a higher volume of business. in one of shakespeare ’ s plays, it was said that “ security is mortals ’ chiefest enemy ” the size and speed with which derivative markets have grown in the recent past to overcome uncertainties have also given rise to certain apprehensions surrounding derivatives themselves. given also the totally liberalized markets of today, allegations have been made that derivatives would, in fact, be adding to market volatility. this has not been tested and proved. it is therefore not advisable to press down the growth and development of derivative markets and thus risk stifling their development due to such fears. as a regulator, the bank of