of exposition – why have they gradually decoupled from swap rates since about the middle of last year? to facilitate and substantiate my answer, i would first like to show you on slide 3 a chart on the evolution of the spread between overnight index swaps and german bunds for the 10 - year tenor. you can see three things here : first, unlike the two - year tenor, the spread has been relatively stable over the past two years, although also here we have recently observed a slight downward trend ; but the scale and scope are much more moderate, so this suggests that maturity - specific factors must currently be at play ; second, you can see that there was a sharp and sudden drop in that spread in january 2015 ; incidentally, that drop occurred around the announcement of the ecb ’ s app ; 1 / 8 bis central bankers'speeches and third, the current level of the 10 - year spread is far from being unusual from a historical perspective ; in the summer of 2011, for example, spreads widened sharply on account of a sudden reversal in risk sentiment that brought the euro stoxx 50 down by nearly 30 % in a matter of few weeks. when we look at these last two episodes, it is probably easy to see that the swap spread – in one way or another – is likely to be related to differences in the relative supply and demand of government securities and interest rate swaps. indeed, the supply of swaps is very ample and practically only constrained by the amount of credit risk which can be taken by market participants when entering into these contracts. government bonds, by contrast, are in more limited supply. so, when investors pile into government bonds because they are looking for safe and liquid assets, such as in the summer of 2011, demand temporarily increases, pushing up prices and driving down yields. announcements of central bank asset purchase programmes make this point even clearer : the sharp drop in the swap spread around the announcement of the app in january 2015 reflected a re - pricing by investors of the future net supply of bunds to the market – after the ecb ’ s purchases – and the associated duration risk to be borne by private investors. the current situation in the short - term segment of the bond and swap market resembles many of the aspects i just alluded to. specifically, we think that the recent spread widening is by and large the result of a growing supply and demand imbalance that has contributed to the fall in short - term sovereign bond yields to the

christine lagarde : imfc statement statement by ms christine lagarde, president of the european central bank, at the forty - eight meeting of the international monetary and financial committee ( imfc ), imf annual meetings, marrakech, 14 october 2023. * * * introduction following the devastating earthquake in morocco, i wish to express my heartfelt solidarity with the moroccan people as well as with the victims of other recent natural disasters. although the global economic outlook has remained broadly the same since our previous meeting in april, growth prospects across major economies have been changing, with the outlook for major advanced economies proving more resilient than expected. however, the recovery prospects for the global economy remain fragile amid persisting geopolitical tensions, stemming in particular from russia's invasion of ukraine, rising trade fragmentation and the possibility of renewed financial sector stress. global headline inflation is receding, but underlying inflationary pressures remain persistent as labour markets continue to be tight. the ecb is determined to ensure that inflation returns to its 2 % medium - term target in a timely manner. in order to reinforce progress towards the target, the governing council decided at its september meeting to raise the key interest rates by 25 basis points, bringing the total rate increase since july 2022 to 450 basis points. moreover, as of july this year, the eurosystem is no longer reinvesting principal payments from maturing securities under the asset purchase programme. on the basis of our latest assessment, we consider that our key interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to our target. our future decisions will ensure that the key ecb interest rates will be set at sufficiently restrictive levels for as long as necessary. we will continue to follow a data - dependent approach to determining the appropriate level and duration of restriction. economic activity the euro area economy has slowed markedly over the past year. having broadly stagnated over the first half of this year, real gdp is expected to remain subdued in the coming months. incoming data suggest that activity has been weak in the third quarter, as slower global demand and the impact of tighter financing conditions weigh on growth. manufacturing continues to suffer, while the services sector, having shown resilience in the first half of the year, has now also started to weaken. economic momentum should pick up over time, as falling inflation and higher wages will increasingly support real incomes and lead to renewed growth in consumer