is for more strong growth. let me put some hard numbers to that : i expect real gdp to increase by around 3 percent this year and by 2. 5 percent in 2019. assuming this forecast comes to fruition, this will be the longest expansion in u. s. history based on data going back over 150 years. this above - trend pace of growth should lead to continued solid job gains and further declines in the unemployment rate. i expect the unemployment rate to edge down to slightly below 3. 5 percent next year, the lowest level in nearly 50 years. in keeping with this strong economic outlook, i expect price inflation to move up a bit above 2 percent. importantly, i don ’ t see any signs of greater inflationary pressures on the horizon. this is all very good news, especially in the context of the slow recovery and low inflation that has persisted in the years since the financial crisis. in light of the progress we ’ ve made on our monetary policy goals, the fomc has been in the process of gradually normalizing monetary policy for the past few years. looking forward, i continue to expect that further gradual increases in interest rates will best foster a sustained economic expansion and achievement of our dual mandate goals. since first raising rates from near - zero back in december 2015, the fomc has continued to 1 / 4 bis central bankers'speeches raise the target range for the federal funds rate as the economy has improved and moved toward our maximum employment and 2 percent longer - run inflation objective. our most recent rate increase came in late september, when the fomc set the target range between 2 and 2. 25 percent. 2 throughout, we ’ ve repeatedly stressed that we foresaw this to be a process of gradual normalization, reflecting the balancing of risks to reaching our goals. in particular, downside risks to the achievement of our employment and inflation goals amid very low interest rates were compelling arguments for a relatively cautious and predictable approach to policy. this proved its worth : the u. s. economy continued to expand at a healthy pace even as the fed raised rates numerous times. for those who follow the fed closely, you ’ ve noticed that the fomc has been slimming down its statements of late and using less forward guidance about the future path of policy. in this vein, the fomc in its recent statement removed language indicating that monetary policy remains accommodative. 3 let me make clear, these more concise statements do not sign

. the gap reflects the sovereign debt tensions and the consequent unevenness of monetary policy transmission in the diverse economies of the area. other conditions being equal, an increase of 100 basis points in the yield spread between ten - year italian and german government bonds tends to be reflected in an increase of about 50 basis points in the average rates on loans to firms in italy after one quarter and fully after a year. in september, the banks ’ total funding, excluding eurosystem refinancing, was down by 2. 6 per cent from twelve months earlier. the difficulty of raising funds, particularly acute between the summer of 2011 and last spring, has regarded foreign deposits – almost entirely interbank deposits – and bond issues on international wholesale markets. in recent months, however, we have begun to see signs of a recovery, including in the uncollateralized segment ; total issues have amounted to €11 billion, of which €8 billion unsecured. in periods of strain the decline in fund - raising on the market has been offset by greater recourse to eurosystem refinancing ( which has increased by €250 billion since may 2011 ), thanks to which italian banks can cover the wholesale bonds falling due in 2013 – 14. in more recent months, with the general improvement in market conditions, central bank lending to italian banks has stabilized. retail funding remains a strong point of italian banks. italian households ’ deposits grew by 3. 7 per cent in the twelve months to september, and substantial subscription of bank bonds by retail investors continued. loan quality is worsening. in the second quarter of this year, the ratio of adjusted new bad debts to loans outstanding rose to 2. 1 per cent, returning to around the end - 2009 level. the bis central bankers ’ speeches deterioration involved loans to firms, the default rate on which reached 3. 2 per cent, with a high of over 6 per cent for construction firms. preliminary data indicate that the deterioration has not halted in the last few months. by contrast, the default rate on loans to households remained stable at 1. 2 per cent, relatively low by the standards of the past. in june of this year gross impaired loans ( bad debts, substandard and restructured loans and overdue positions ), three quarters of which involved firms, amounted to 12. 3 per cent of total bank lending ; in 2007 the figure had been 5. 1 per cent. taking into account the write - downs already made,