on our balance sheet will remain stable for a good while, and that the downward pressure on longterm interest rates will persist. in other speeches, peter praet has already shown that the reinvestment policy indeed has a very persistent impact on term premia2. likewise, our continued pledge to keep key policy rates at their current levels well past the end of net purchases has assured in the past and will assure in the future that the short - end of the curve remains firmly anchored at low levels. as we move further in time, the main instrument for shaping the stance will again become the key policy rates, including forward guidance about their likely evolution. as such, our communication will likely be further specified and calibrated to ensure that inflation continues to evolve in line with our objective. we will continue to inform markets to the best of our ability about the state of our thinking about the way forward, making adjustments to our policy as predictable as possible. predictability and gradualism should also limit the spillovers to central, eastern and southeastern european ( cesee ) countries when we decide on normalizing our monetary policy. indeed, the federal reserve “ taper tantrum ” of may 2013 did lead to sizeable capital outflows from catching - up economies, including in the cesee region. however, the monetary policy tightening alluded to in ben bernanke ’ s tapering speech came as a surprise to financial markets ; as said before, the ecb ’ s monetary policy normalization aims to be gradual and predictable. moreover, since then, cesee countries have taken steps to reduce their vulnerabilities : most of them now have deeper local currency debt markets, smaller macro imbalances, and stronger macroeconomic frameworks. nevertheless, cesee countries are still exposed to a tightening in global financial conditions, due to their generally elevated external liabilities ; at 56 % of gdp on average ( in 2017 ), most cesee countries have a relatively high external debt ratio. vulnerability to a rise in global rates varies greatly across the region, however, reflecting not only differences in debt levels but also in the structure of countries ’ external liabilities, including the role of fdi versus more volatile capital inflows in those liabilities and the shares of foreign currency and short - term debt. hence, cesee countries should take advantage of the current stronger global economy to 4 / 5 bis central bankers'speeches continue to build resilience to changes in external financial conditions. structural

in 2019 and 2020. this suggests that the growth - inflation disconnect in the us is temporary. for the euro area, available data call for more caution. the sovereign debt crisis meant that the cyclical recovery took much longer to manifest itself : real gdp only returned to its pre - crisis peak level in 2015 but the economic expansion has been robust and broad - based since and looks set to continue. the unemployment rate is on a downward path, although it has not yet reached its pre - crisis level. despite these favourable developments, inflationary pressures remain weak. underlying inflation has been basically flat at 1 % over the last 5 years – far from our objective of below but close to 2 % - and wage growth does not yet show convincing upward momentum. looking forward, underlying inflation is projected to only gradually rise to 1. 8 % in 2020. in contrast to the euro area and the unites states, nominal weakness has been a permanent 1 / 5 bis central bankers'speeches feature of the japanese economy over the last 2 decades. while recently, economic growth has strengthened a bit and the unemployment rate fell to record lows, wage growth has remained weak and inflation stubbornly low. the bank of japan appears confident in reaching its inflation target, however, projecting cpi inflation excluding fresh food to accelerate to above 2 % in 2019. as the three economies find themselves at different points in the business cycle and confidence in inflation getting back to target varies, the respective monetary policy stances differ as well. on the one hand, the federal reserve is well underway with normalization. it ended its net asset purchases in october 2014, started raising the federal funds rate in december 2015 and has recently started to gradually reduce its balance sheet. consequently, the federal funds rate has again become the primary tool for signalling the monetary policy stance. in march the rate ’ s target range was hiked to 1. 5 % to 1. 75 % ; currently markets expect 3 more rate hikes this year while fed officials pencil in 2 more. on the other hand, the eurosystem and the bank of japan remain more cautious, keeping their monetary policy stimulus in place. in 2016, the bank of japan even revamped its monetary policy framework introducing negative rates, yield curve control and an inflation - overshooting commitment. in the euro area, the strengthening recovery and improved confidence in inflation converging to our aim have allowed us to gradually start recalibrating our monetary policy package over the past months. we reduced