Long-run saving Peter Praet and monetary policy Member of the - - PowerPoint PPT Presentation

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Long-run saving Peter Praet and monetary policy Member of the Executive Board of the ECB Parliamentary evening on "Challenges for long-term savings products in the context of the zero- interest policy" Brussels, 14 November 2016

SLIDE 1

Long-run saving and monetary policy

Parliamentary evening on "Challenges for long-term savings products in the context of the zero- interest policy"

Peter Praet Member of the Executive Board of the ECB

Brussels, 14 November 2016

SLIDE 2

5 10 15 20 1980 1985 1990 1995 2000 2005 2010 2015 DE EA UK US

Nominal interest rates and long-term growth expectations

10-year government bond yields

Annual yields (%)

Source: ECB and Haver Latest observation: October 2016

6-10 years ahead grow th expectations for the euro area

% per annum

Source: Consensus Economics Latest observation: October 2016

1.2 1.4 1.6 1.8 2.0 2.2 2004 2006 2008 2010 2012 2014 2016

SLIDE 3

Recoveries and the evolution of potential GDP

Real GDP and pre-crisis expected path

Index: 2007 = 100

Source: European Commission, Consensus Economics, ECB calculations Latest observation: 2015 Note: Dotted lines represent evolution of GDP basedon private sector expectations in October 2007. DE EA ES DE EA ES

100 110 120 2008 2010 2012 2014

Actual growth Expected growth path in 2007

Potential EA output reduction due to the crisis

Index, potential GDP in 1999 = 100

Source: European Commission Fall 2016 forecast, Output Gap Working Group. Note: Counterfactual potential GDP assumes that potential GDP continued to grow at its 2007 growth rate

100 105 110 115 120 125 130 135 140 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

Counterfactual Potential GDP Potential GDP Actual GDP

SLIDE 4

Inflation and deflation protection

Price of inflation and deflation protection

Basis points per annum

Source: Bloomberg Latest observation: 10 November 2016

50 100 150 200 250 300 350 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Deflation protection Inflation protection

SLIDE 5

Euro area inflation and economic activity

Euro area HICP inflation

annual percentage changes

Source: Eurostat and ECB staff calculations Latest observation: October 2016

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 2008 2010 2012 2014 2016

All-items excluding energy and food Overall index

Euro area real GDP, composite PMI and ESI

q-o-q growth rate, diffusion index and percentage balance

Sources: Eurostat, Markit and European Commission. Latest observations: 2016Q3 for GDP; October 2016 for ESI and PMI

1 2 35 40 45 50 55 60 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

real GDP (rhs) ESI (lhs) composite PMI output (lhs)