the cyclical upswing started to materialise, however, increases in consumer prices over recent months were relatively large and protracted. this reflected mainly the impact of increasing oil prices seen throughout 1999 as well as, following the continued depreciation of the effective exchange rate of the euro, increases in import prices. these increases in oil prices and in import prices led to a situation where there were increasing risks of second round effects on consumer prices. with respect to both the first pillar and the second pillar of the strategy, developments over the last few months led the governing council of the ecb to raise interest rates. the main refinancing rate was raised to 3 % on 4 november 1999 and then to 3. 25 % on 3 february 2000. by raising interest rates in view of the developments that i just described, it was aimed to contribute to ensuring that the cyclical upswing currently under way in the euro area will be both strong and sustainable, because it will occur in an environment of price stability over the medium term. over the next months it is particularly important that social partners keep wage increases in line with price stability as well as being supportive of further growth in employment. the rate of unemployment in the euro area has fallen throughout 1999 but still remains high. a lasting reduction in unemployment could be achieved only if further progress is made in structural reforms aimed at promoting flexibility on the labour market, providing jobs to low skilled workers and facilitating the return to the job market of the long - term unemployed. in addition, the growth prospects of the euro area over the medium term would clearly benefit from the completion and further deepening of structural reforms promoting competition on the markets for goods and services. 2. euro area financial markets also for the financial markets of the euro area, structural reforms aimed at promoting competition appear to be necessary. these reforms will over time contribute to improving the working of financial markets integrated at the area - wide level. furthermore, the eurosystem has an obvious interest in well functioning and efficient financial markets because financial markets are the conduit through which monetary policy decisions are channelled into the economy. let me consider first the money market. in 1999, within the euro area cross - border operations constituted a large share of all operations on the money market. the market has evidently benefited from the creation of a strong and secure backbone of payment systems, including the real - time gross - settlement system operated by the european system of central banks ( escb ). the money market of the euro has

in broader credit conditions since the introduction of our new non - standard measures. the survey, addressed to the senior loan officers of a representative sample of euro area banks, provides information on financing conditions in euro area credit markets and on banks ’ lending policies. the left - hand chart in figure 4 shows that banks have consistently eased their credit standards for loans to non - financial corporations over the past year. the easing of credit standards stems, notably, from the lower cost of funds and balance sheet constraints, as well as from greater competition among banks. both developments were clearly objectives of our measures, in particular of the tltros. the right - hand chart in figure 4 shows net credit demand conditions and their contributing factors. easier access to credit has been coupled with a consistent increase in firms ’ demand for loans. the general level of interest rates, according to the survey respondents, is contributing most to the recovery in loan demand. as i have already mentioned, an important transmission channel for asset purchases relates to the fact that different assets are imperfect substitutes. consequently, interventions by the central bank that affect the supply of various assets available to private investors influence the prices of many other assets, including investment grade bonds, equities, real estate and foreign assets, with consequences for the exchange rate. figure 5 shows the increase in equity and bond prices ( the latter illustrated by investment grade corporate bond yields ). bis central bankers ’ speeches figure 5 the ongoing deterioration of long - term inflation expectations was a major factor in the extension of our purchase programme in january this year. figure 6 shows the evolution of these expectations over the past decade and since 2012. euro area longer - term inflation expectations ( both market - based and, to a lesser extent, survey - based ) had been falling since early 2013, reaching an all - time low by early 2015. figure 6 bis central bankers ’ speeches expectations of inflation five years ahead, as expressed in the ecb survey of professional forecasters, fell from 1. 98 % in the first quarter of 2013 to 1. 77 % in the first quarter of 2015. the five - year inflation - linked swap rate five years ahead fell from 2. 4 % to 1. 5 % over the same period. since january 2015 this declining trend has been reversed. both market - based and survey - based measures of longer - term inflation expectations have recovered from their lows. while broadly similar dynamics in market - based measures of longer - term inflation expectations have been observed in other countries, the decline