run. yet, while the equilibrium real rate can be very negative, there is a lower bound to the nominal interest rate. in the context of the disinflationary pressures we faced in 2014 and 2015, this implied that the room for the additional reduction of short - term interest rates was insufficient to generate the necessary stimulus, given the low level of the equilibrium rate. to address this challenge, the ecb sought to affect the whole range of interest rates that are relevant for private sector financing conditions. this strategy constitutes of three elements. the first was the launch of a negative interest rate policy, which entailed a decrease in the deposit facility rate to – 0. 1 % in june 2014 and to – 0. 2 % in september 2014. this first wave of cuts into negative territory provided additional stimulus as it extended the scope of conventional monetary policy. the deposit facility rate was subsequently brought to – 0. 4 % in two further rate reductions in december 2015 and march 2016. the second was the introduction of a credit easing package, which included a third covered bond purchase programme and an asset - backed securities purchase programme. this aimed to improve the pass - through for each euro of liquidity injected into the financial system to private sector borrowing costs and to reinforce the accommodative monetary policy stance. the package also contained targeted longer - term refinancing operations, which were specifically designed to support bank lending to the private sector. the third element of the strategy was the addition of a public sector purchase programme to the ecb ’ s asset purchase programme ( app ). these measures helped to compress the risk premia all along the yield curve. shortly after the public sector purchase programme was launched, the governing council embarked on a second wave of cuts to the deposit facility rate, which empowered the portfolio rebalancing channel of the app as it incentivised banks to invest central bank reserves in higher yielding assets. these instruments were complemented by the use of forward guidance, through which we started to communicate our expectations of future policy, along with the conditions that would warrant a change in the policy stance. the economic impact of monetary policy measures our monetary policy strategy has borne fruit, with 2017 marking the euro area ’ s fifth consecutive year of positive growth. recently, the pace of economic growth has moderated somewhat, which in part relates to temporary factors and possibly some pull - back from last year ’ s strong growth. in addition, concerns about trade protectionism may have damp

period of time and on policy rates remaining at their present levels well past the end of our net asset purchases. our forward guidance on policy rates will then have to be further specified and calibrated as appropriate for inflation to remain on the sustained adjustment path to levels below, but close to, 2 % over the medium term. the stock of longduration assets held in our portfolio will continue to put downward pressure on longer - term interest rates well beyond the end of our net purchases. conclusion low interest rates fundamentally reflect the consequences of unfavourable secular trends, combined with the fall - out from the global financial crisis and euro area sovereign debt crisis. as a result, the equilibrium real interest rate has declined to very low levels, although the precise level is very uncertain. confronted with a declining equilibrium interest rate and the effective lower bound on policy rates, we had to resort to unconventional monetary policy measures in order to provide the necessary accommodation to support domestic demand, thwart the deflationary risks which were emerging in 2014 and prepare the way for inflation to return to our objective. however, monetary policy cannot increase the long - term real interest rate. this requires policies that address the factors depressing the real interest rate : increasing potential growth and completing the euro area ’ s institutional set - up. such measures would support investment and rebalance saving and investment, which in turn would increase the equilibrium real interest rate and support the normalisation of interest rates. 1 i would like to thank john hutchinson for his support in preparing this speech. 2 expected inflation can be further decomposed into “ risk neutral ” inflation expectations and inflation risk premia. 3 for the united states such analysis can be undertaken from the late 1990s when treasury inflation - protected securities became available, while inflation swaps started being traded quite a bit later. see, for example, abrahams, m., adrian, t., crump, r. k., moench, e. and yu, r., ( 2016 ), “ decomposing real and nominal yield curves ”, journal of monetary economics, volume 84, december, pp. 182 – 200. in the euro area, these decompositions can also be undertaken using model - based analysis, albeit only over a shorter time period due to the later availability of suitable inflation - linked instruments. 4 whereas the inflation risk premia and the real term premia, taken together, display a trend decline over recent decades, the analysis of their individual dynamics is subject to