effective lower bound for the conduct of monetary policy. one basic conclusion of the review is that it is essential to build a sufficient medium - term inflation buffer ( as captured by the symmetric two per cent inflation target ) to create the monetary policy space required to be effective in tackling negative shocks. a second basic conclusion is that, if the economy is close to the effective lower bound, it is vitally important to adopt especially forceful or persistent monetary policy action to avoid negative deviations from the inflation target becoming entrenched. in turn, this may also imply a transitory period in which inflation is moderately above target. in particular, the review identified forward guidance, asset purchases and longer - term refinancing operations as instruments in the monetary policy toolbox that can help to address the constraint of the effective lower bound on policy rates. at its 21 july monetary policy meeting, the governing council revised its forward guidance on policy rates in line with this new strategic orientation. in particular, the new forward guidance specified three conditions that need to be met before we would start raising our policy rates. the first condition is that the governing council “ sees inflation reaching two per cent well ahead of the end of its projection horizon. ” the second condition is that the two per cent target is reached 1 / 2 bis central bankers'speeches “ durably for the rest of the projection horizon. ” the third condition is that the governing council “ judges that realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at two per cent over the medium term. ” let me highlight today two key features of this rate forward guidance. first, requiring that we see inflation reaching two per cent not only “ well ahead of the end of our projection horizon ” but also “ durably for the rest of the projection horizon ” ensures that interest rate policy will not react to inflation shocks that are expected to fade away before the end of our projection horizon. second, the condition that “ realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at two per cent over the medium term ” serves an important purpose in our analysis of the incoming data : it sharply differentiates between the volatile components of headline inflation and the dynamics of underlying inflation, which is the persistent component that is the best guide to medium - term inflation dynamics. the inclusion of a condition that is based on realisations of underlying inflation takes into account the intrinsic uncertainty of economic forecasts, especially during periods of structural change that

basis on which we have determined loan loss projections, and as part of a continuing effort to create more transparency around these matters. i ’ d also like to mention that the data verification exercise has provided some reassurance about data quality, while not all of the relevant data or paperwork was readily accessible, the consultants did not find data and paperwork matters of material impact on likely losses. smaller, but more soundly constituted, irish banks should be in a better position to provide loan and other financial services to households and businesses and to support the economic recovery. bis central bankers ’ speeches