assess the strength and persistence of the factors that are slowing the return of inflation towards 2 %. we will use as one input the eurosystem staff projections. another input will be the work of our staff in consultation with the eurosystem committees on the monetary policy stimulus that has been achieved so far, and the range of instruments available in case more accommodation is seen as necessary. if we conclude that the balance of risks to our medium - term price stability objective is skewed to the downside, we will act by using all the instruments available within our mandate. in particular, we consider the app to be a powerful and flexible instrument, as it can be adjusted in terms of size, composition or duration to achieve a more expansionary policy stance. the level of the deposit facility rate can also empower the transmission of app, not least by increasing the velocity of circulation of bank reserves. in making our assessment of the risks to price stability, we will not ignore the fact that inflation has already been low for some time. looking forward, monetary policy will remain accommodative for as long as needed to secure a sustained adjustment in the path of inflation. that means we want to feel suitably confident that inflation will not only converge to, but also stabilise around levels close to 2 % over the relevant medium - term horizon. so let me reiterate what i said here last year : if we decide that the current trajectory of our policy is not sufficient to achieve that objective, we will do what we must to raise inflation as quickly as possible. that is what our price stability mandate requires of us. bis central bankers ’ speeches

pass - through. to give you a comparison, we estimate that in normal times our policy rate has to be instantaneously reduced by 100 basis points to see a similar impact on lending rates after such a short time period. banks ’ rate - setting process is typically slow, but not this time. and we are not only seeing this pass - through for larger firms, but also for small - and medium - sized enterprises ( smes ). remember that at the height of the crisis in 2012, the rates on very small business loans, which are typically given to smes, were about 2. 5 percentage points higher than those on large loans. other terms and conditions, such as collateral, were also more demanding. as documented by our surveys on sme access to credit, at this time “ access to finance ” was considered the dominant concern for small enterprises, right after “ finding customers ” for their business. our measures are gradually changing that picture. since the first round of our survey in april this year, “ access to finance ” has dropped to among the least important concerns for smes. they in fact report an improvement in the availability of external sources of finance, and in the willingness of banks to provide credit. terms and conditions have also sharply converged towards those enjoyed by large corporate borrowers. so why has transmission been so accelerated? there are two reasons. first, the app was launched against the backdrop of the completion of our comprehensive assessment of bank balance sheets, which ensured that banks were in the strongest possible position to transmit the boost to credit supply. second, and even more fundamentally, banks ’ lending processes react to macroeconomic conditions in a feedback loop. for much of the crisis, that loop was pernicious. but our measures have been able to turn it positive. when the economy was weak, banks tended to increase lending rates because they feared that the probability of default on their loans would rise. those higher rates meant good credit demand fell and the economy worsened further. as the slump deepened, servicing credit then became more difficult for firms and households with outstanding loans, pushing higher numbers of borrowers into delinquency. the loop then returned back to the beginning, as banks ’ original increase in lending rates was validated ex post. starting in the summer of 2014, however, our measures began to increase competitive pressures on banks to reduce lending margins. the comprehensive assessment meant that more banks were in a position to benefit from low funding costs and lend, while the targeted long