may. market analysts ’ surveys indicate expectations of a slightly delayed lift - off. i don ’ t want to directly answer this question. but we try to judge if market expectations reflect fundamentals and if market expectations fit with our views. it ’ s a two way street : we learn from markets and markets learn from us. markets have a certain expectation about the end of the net asset purchase programme ( app ). we try to see if this fits with the narrowing between the inflation objective and market indicators of inflation expectations. for example, i look at the gap between the objective of below, but close to, 2 % and the 5 - year / 5 - year forward swaps - derived inflation rate, which is now at 1. 7 percent. so the gap is narrowing, which is why markets don ’ t expect us to continue the app much longer. market prices seem to be coherent with the narrowing of the gap between market - based inflation expectations and our objective. it ’ s a good sign. there is a convergence between market expectations and our intended end date, with the optionality. when approaching the end of our net asset purchases, our forward guidance on policy rates will have to be further specified and calibrated as appropriate to keep inflation on a sustained adjustment path towards our inflation objective. so what happens afterwards? our resilience criterion for inflation is not always understood well. it means that for us to stop net asset purchases, we have to be sure that the financial conditions resulting from that announcement will not compromise the adjustment path of inflation. this path is by itself conditional on easy financial conditions. and financial conditions are the result of three instruments : net purchases, re - investments and our forward guidance on the short - term policy rates. today we say that our policy rates will stay at their present levels well 2 / 4 bis central bankers'speeches past the horizon of our net asset purchases. this indication is an important conditioning variable – together with net purchases and re - investments – behind the convergence path that we project today. as we move forward in time, as is natural, the relative importance of the three policy tools will change, and the main tool for shaping the policy stance will become the path of our key interest rates and the forward guidance about their likely evolution. today, by and large, markets quantify the “ well past ” interval as ‘ up to next spring ’. but at some point that ‘ well past ’ indication will not be sufficient any longer to give the public enough

new nairu. economists have been surprised by the fact that the nairu has been continuously revised downwards. the supply of labour has increased more than expected, so there were reservoirs of labour. it could be migration or longer working hours. it is clear that if you believe that the degree of slack is higher, then the process of convergence to below, but close to, 2 % over the medium term would be drawn out. we should not draw implications for policy immediately but it shows you the richness of the discussion at a stage where the economy is booming and we don ’ t see very strong wage increases and little pass through to prices. however, we still see improvements in the path of inflation, so the bottom line is not bad at all. it means that the economy may have unexploited potential capacity. if slack is bigger, wouldn ’ t it mean that the path would be shallower? 1 / 4 bis central bankers'speeches well, other things being equal, it would be shallower. another explanation for low wage growth is that there is some backward looking behaviour in the wage - setting mechanism and in inflation expectations. for the time being i take an open view. monetary policy also plays a role. our asset purchases programme has a minimum horizon of end september, or beyond, if necessary, and in any case until we see a sustained adjustment in inflation. it is true that when we communicate about what happens beyond september, we want to have confirmation of data. things are going in the right direction but there are a number of uncertainties. so the message is patience, persistence and prudence. when do you need to communicate what happens beyond september? it can ’ t be on the very last day, but i argue that it shouldn ’ t be too early, either. there are not too many governing council meetings between now and then. can you see a scenario that you use the june projections to set up the decision and then take the actual decision in july? the projection exercise is always important. there are four per year and there will be one in june. it ’ s true that projections in general are useful to guide and structure the discussion. but i would caution against concluding that there is a pattern. we should not put too much weight on the projections. you mentioned earlier that market expects the first rate hike between the first and second quarters of next year. how comfortable with those expectations? the expectation implicit in the forward curve currently fluctuates around april and