. in addition, expectations appear more firmly anchored to the target than before, which shows in the fact that exchange rate volatility and unexpected changes in inflation have less impact than they did in the past. the inflation target has therefore gained credibility. as a result, it takes more to move inflation away from the target than in the past, and inflation can be kept at target over the medium term with lower interest rates than was previously possible. by the same token, the possibilities for monetary policy to mitigate fluctuations in economic activity without jeopardising the inflation target are greater. what is the current situation, in light of these explanations? in some respects, the current situation is similar to that a year ago. for this year, it is forecast that gdp growth will remain well above long - term growth in potential output and demand pressures will still increase, but that inflation is projected to remain below target for most of the year. this is uncertain, however, and various changes have taken place and others may lie ahead, which could affect future developments. the tradable sector is now experiencing stronger crowding - out effects from tourism, after the rapid growth of the latter in recent years. sizeable pay increases in the recent term and last year ’ s strong appreciation of the krona cut into profits, and companies now have less scope to absorb pay rises. the recent appreciation of the krona is a result of growth in tourism and other favourable developments, and it tends to shift demand outside the domestic economy, thereby reducing the positive output gap. although forecasts based on given assumptions and available models indicate that the exchange rate will continue to rise, it should be noted that this is highly uncertain. capital account liberalisation could contribute to either a higher exchange rate or a lower one in the short run, depending on how expectations develop. the special reserve requirements imposed last june on capital inflows to the bond market and high - interest deposits have contained the rise in the exchange rate and will reduce the likelihood of a steep carry trade - related appreciation in the near term. from 12 march, when capital account liberalisation was announced, through yesterday ’ s official listing, the exchange rate of the krona had fallen by 3. 8 %. at present, there are changes taking place in the global economy that will change the situation to some extent. global gdp growth is on the rise, particularly in industrialised countries. commodity prices are rising, and inflation in industrialised countries appears to be increasing as well.

continues to be highly dependent on the future evolution of the pandemic and the success of containment policies. one major reason why we can expect a rebound in activity in the second half of the year is because, when faced with the largest economic shock since the second world war, europe and its leaders showed the unique strength of the european project : by acting together, we can achieve more. the ecb has played its part in this collective effort in the face of an unprecedented crisis. the nature of the pandemic shock called for an extraordinary monetary policy response. we launched the pandemic emergency purchase programme ( pepp ) to help stabilise financial markets and ease our monetary policy stance considerably. the pepp is temporary, targeted and proportionate. it addresses the specific shock at hand, and aims to repair the economic damage and the resulting downward pressures on inflation wrought by the pandemic. in addition, it was also vital that we limited the risk of a credit crunch. so we substantially eased the conditions under which banks can obtain liquidity under our targeted longer - term refinancing operations. banks can now borrow from the ecb at interest rates which can reach - 1 %, under the condition that they are lending to the real economy. six months after we introduced our measures, our policy package has stabilised markets, protected the supply of credit and supported the recovery. this, in turn, should support the return of inflation towards our medium - term objective and safeguard price stability. at the same time, the uncertainty of the current environment requires a very careful assessment of the incoming information, including developments in the exchange rate, with regard to its implications for the medium - term inflation outlook. the governing council continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry. when you look at the past six months, the ecb has not been the only game in town. our measures have been complemented by forceful fiscal responses at both national and european levels. this has been a critically important factor in alleviating the impact of the pandemic on the labour market and on banks ’ lending. we judge that the economy still needs that support if the recovery is to continue and strengthen further. ambitious fiscal measures by national governments were complemented by a €540 billion european safety net. and with the next generation eu fund, europe took a decisive step forwards as the crisis