 Good afternoon and welcome to our press conference. I'm joined here on stage by President Lagarde and by Vice President DeGindos. We are, as in the past meetings, in a hybrid format, so I would like to ask those who are following us via Webex to turn on their cameras and their microphones should they want to ask questions. And now I would like to turn the floor to President Lagarde. President Lagarde, please. So good afternoon. The Vice President and myself are delighted to welcome you to our press conference. The governing council decided today to raise the three key ECB interest rates by 75 basis points. With this third major policy rate increase in a row, we have made substantial progress in withdrawing monetary policy accommodation. We took today's decision and expect to raise interest rates further to ensure the timely return of inflation to our 2% medium-term inflation target following our meeting-by-meeting approach. Inflation remains far too high and will stay above our target for an extended period. In September, euro area inflation reached 9.9%. In recent months, soaring energy and food prices, supply bottlenecks, and the post-pandemic recovery in demand have led to a broadening of price pressures and an increase in inflation. Our monetary policy is aimed at reducing support for demand and guarding against the risk of a persistent upward shift in inflation expectations. The governing council also decided to change the terms and conditions of the third series of targeted long-term refinancing operations known as TELTRO3. During the acute period of the pandemic, this instrument played a key role in countering downside risks to price stability. Today, in view of the unexpected and extraordinary rise in inflation, it needs to be recalibrated to ensure that it is consistent with the broader monetary policy normalization process and to reinforce the transmission of our policy rate increases to bank lending conditions. We therefore decided to adjust the interest rates applicable to TELTRO3 from November 23, 2022 and to offer banks additional voluntary early repayment dates. Finally, in order to align the remuneration of minimum reserves held by credit institutions with the euro system more closely with market conditions, we decided to set the remuneration of minimum reserve at the ECB deposit facility rate. The decision set out, the decision that we took today are set out in a press release that is available on our website. The details of the changes to the TELTRO3 terms and conditions are described in a separate press release to be published at 3.45 continental European time. Another technical press release detailing the change to the remuneration of minimum reserves will also be published at the same time. I will now outline in more detail how we see the economy and inflation developing and will then explain our assessment of financial and monetary conditions. Economic activity in the euro area is likely to have slowed significantly in the third quarter of the year and we expect a further weakening in the remainder of this year and the beginning of next year. By reducing people's real income and pushing up costs for firms, high inflation continues to dampen spending and production. Severe disruptions in the supply of gas have worsened the situation further and both consumer and business confidence have fallen rapidly, which is also weighing on the economy. Demand for services is slowing after a strong performance in previous quarters when those sectors most affected by the pandemic-related restrictions reopened and survey-based indicators for new orders in the manufacturing sector are falling. Moreover, global economic activity is growing more slowly in the context of persistent geopolitical uncertainty, especially owing to Russia's unjustified war against Ukraine and tighter financing conditions. Worsening terms of trade, as the prices paid for imports rise faster than those received for exports, are weighing on incomes in the euro area. The labor market continued to perform well in the third quarter, and the unemployment rate remained at the historically low level of 6.6% in August. While short-term indicators suggest that jobs were still being created in the third quarter, the weakening of the economy could lead to a somewhat higher unemployment in the future. To limit the risk of fueling inflation, fiscal support measures to shield the economy from the impact of high energy prices should be temporary and targeted at the most vulnerable. Policymakers should provide incentives to lower energy consumption and bolster energy supply. At the same time, governments should pursue fiscal policies that show they are committed to gradually bringing down high public debt ratios. Structural policies should be designed to increase the euro area's growth potential and supply capacity and to boost its resilience, thereby contributing to a reduction in medium-term price pressures. The swift implementation of the investment and structural reform plans under the next generation EU program will make an important contribution to these objectives. Inflation rose to 9.9% in September, reflecting further increases in all components. Energy price inflation at 40.7% remained the main driver of overall inflation with an increasing contribution from gas and electricity prices. Food price inflation also rose further to 11.8% as high input costs made food production more expensive. Supply bottlenecks are gradually easing, though their lagged impact is still contributing to inflation. The impact of pent-up demand while weakening is still driving up prices in the services sector. The depreciation of the euro has added to the build-up of inflationary pressures. Price pressures are evident in more and more sectors, in part owing to the impact of high energy costs feeding through to the whole economy. Measures of underlying inflation have thus remained at elevated levels. Among those measures, inflation excluding energy and food rose further to 4.8% in September. Strong labor markets are likely to support higher wages as is some catch-up in wages to compensate for higher inflation. Incoming wage data and recent wage agreements indicate that the growth of wages may be picking up. Most measures of longer-term inflation expectations currently stand at around 2%, although further above-market revisions to some indicators warrant continued monitoring. The incoming data confirm that risks to the economic growth outlook are clearly on the downside, especially in the near term. A long-lasting war in Ukraine remains a significant risk. Confidence could deteriorate further and supply side constraints could worsen again. Energy and food costs could also remain persistently higher than expected. A weakening world economy could be an additional drag on growth in the euro area. The risks to the inflation outlook are primarily on the upside. The major risk in the short term is a further rise in retail energy prices. Over the medium term, inflation may turn out to be higher than expected. If there are increases in the prices of energy and food commodities and a stronger pass-through to consumer prices, a persistent worsening of the production capacity of the euro area economy, a persistent rise in inflation expectations above our target, or higher than anticipated wage rises. By contrast, a decline in energy costs and a further weakening of demand would lower price pressures. Bank funding costs are increasing in response to the rise in market interest rates. Borrowing has also become more expensive for firms and households. Bank lending to firms remains robust as they need to finance high production costs and build up inventories. At the same time, demand for loans to finance investment has continued to decline. Lending to households is moderating as credit standards have tightened and demand for loans has decreased in a context of rising interest rates and low consumer confidence. Our most recent bank lending survey reports that credit standards tightened for all loan categories in the third quarter of the year, as banks are becoming more concerned about the deteriorating outlook for the economy and the risks faced by their customer in the current environment. Banks expect to continue tightening their credit standards in the fourth quarter. So summing up, today we have raised the three key ECB interest rates by 75 basis points and expect to raise interest rates further to ensure the timely return of inflation to our medium term target. With this third major policy rate increase in a row, we have made substantial progress in withdrawing monetary policy accommodation. The changes to the terms and conditions of our targeted longer term refinancing operations will also contribute to the ongoing policy normalization process. Our future policy rate decisions will continue to be data dependent and follow a meeting by meeting approach. We stand ready to adjust all of our instruments within our mandate to ensure that inflation returns to our medium term inflation targets. And we now stand ready to take your questions. Thank you, President Lagarde. And the first question goes to Caroline Luk of Bloomberg News. Caroline, please. Hi, good afternoon, President Lagarde. Good afternoon. Could you tell us whether you are comfortable with the expectation that interest rate steps are going to slow after today's decision and peak somewhere around 3% next year? And secondly, since we're now at the lower end of the neutral rate estimates, would it be fair to assume that the ECB could be ready to lay out a plan for reducing its balance sheet at its next meeting in December? So that's a bag of questions that you put into one question. So what we have done with the decision taken today is making yet more progress in withdrawing the accommodative and support to demand that was made available. So we have made substantial progress in withdrawing that. Have we completed the job? Have we finished the normalization of our monetary policy, as we have called it? No. There is still ground to cover. What we have reiterated now is that we're going to decide the future path and pace of our rate increases on the basis of the data that we have and we will do so meeting by meeting. So we are very much and deliberately turning our back to forward guidance, which is not helpful in the current circumstances given the level of uncertainty that we have pretty much all around. So what we are saying here is number one, we continue and make substantial progress in withdrawing. We will have further rate increases in the future. So the normalization process continues and at some point in time, we will have of course to identify the rate which will deliver the 2% medium term target that we have. So the destination for us is clear. The exact pace will be determined meeting by meeting. And to do that, as I said, it will be data dependent and it will be a meeting by meeting. But we will look precisely at three key factors just to give you a bit of flavor of how we are going to work in the next meetings that we have. First, we will look of course at the inflation outlook, which takes into account the evolution of the economy, including the higher likelihood of a recession. So number one, the inflation outlook. This is what we are fighting. It's the inflation. That's the first one. Second is we will also take into account the measures that we have taken so far because in the last three meetings, including this one, we have hiked by 200 basis points. And third, we will also be attentive to the transmission lag of monetary policy and we know as we do that that any decision that we make is not going to have an immediate impact on inflation but will be subject to the time lag that always affects monetary policy decisions. So that gives you, I hope, a bit of the flavor of the thinking and the rational behind those decisions that will be made and those hikes that we will decide in the near future. I think you had a second question which had to do with our balance sheet. So you covered it all in one question, not all because there are lots of other interesting and decisive matters that we discussed. Well, let us call it the reduction of our APP Monetary Portfolio. This is a matter that we have discussed at our last retreat amongst ourselves governors. And we did not discuss the substantive issues today, deliberately because we decided on a lot of issues. But what we decided is that we would pursue that discussion and we would decide the key principles of the reduction of our APP Monetary Portfolio in December. So that gives you a bit of an indication of when those key principles will be discussed, decided, and I will be very pleased to inform you about those principles at our next monetary policy meeting in December. And that has to be, of course, in advance of the decision to implement and to roll out this reduction. Thank you, Madame Lagarde. And the next question goes to Joamana Bersetcher of CNBC. Joamana, please. Hi, President Lagarde. Thank you. Two questions for you. The first is with respect to the neutral rates. You said at the last meeting, and this is a quote, what I can tell you is that the further away we are, the larger the step we are taking, which is why we are front-loading now. Given that the deposit rate is now 1.5 percentage points and the ECB have previously guided to 2% as being the upper end of the range of neutral, is it fair to assume that subsequent hikes will be smaller in magnitude than what you delivered today? That's my first question. And then my second question, I know it wasn't discussed in the statement, but it's about the anti-fragmentation tool, TPI. When you're looking at this tool and potentially triggering it, what is more important for the ECB, the spread level of a sovereign bond yield versus Germany or the absolute yield level? Thank you. Thank you very much for your two questions. I think what we decided is clear and straightforward. It's a significant rate increase, 75 basis point, twice in a row. And we decided to do that in order to pursue the substantial progress that we have to make in order to withdraw monetary policy accommodation. Our sense is that we have already made significant progress. As I said, we are not done yet. There is more ground to cover. And the question of what pace will be... What will be the magnitude of future rates will be determined meeting by meeting and will be data-dependent, adopting the review of the three factors that I have referred to earlier, which is roughly and quickly inflation outlook, the measures we've taken so far and the time lag of monetary policy. So I cannot tell you much more than that at this point in time. I stand by my comment that there is significant progress withdrawing accommodation, more ground to cover. We have acknowledged that more rates are in the pipeline, but at which pace, to which level I cannot tell you. I think we had a slight discussion about how not necessarily helpful if neutral rate is. And we decided to stick to withdrawal, completing that job, and then taking a step to decide whether we need and how much we need to go further. Because it is not by simply normalising monetary policy that we will identify and reach the interest rates that is necessary in order to deliver the 2% inflation target medium term that we have. Your second question about TPI. We did not discuss TPI at all. And I have said very clearly that in order to trigger TPI, we will look at a series of indicators amongst which the spreads, the yields, but a few other indicators as well. And then we will determine if one country or several countries are or not eligible to TPI on the basis of criterias that I have also described for you in the past, which have to do with that sustainability macro framework as well as fiscal policies. So that stands unchanged. Thank you, Madame Lagarde. And the next question goes to Aud Kursulak of AFM Business. Aud, please. Good afternoon, President Lagarde. So according to the ECB, at what point does fiscal policy when it provides aid against inflation when it contours to monetary policy as the British case made a difference? And second question about systemic risk that you are monitoring. Have you identified some financial vulnerabilities in our economy and which ones? Thank you. I think in the present state of uncertainty with the likelihood of recession looming much more on the horizon and the probability of it having increased, everyone has to do their job. Our job is price stability. This is our primary mandate. And we are riveted to that. We are determined, all of us on the governing council, we are determined to deliver that price stability which we have defined as the 2% inflation target in the medium term. There is no hesitation on that front. We of course have a dialogue with fiscal authorities and when I sit at the table of the Eurogroup in particular with a colleague who are finance ministers, I explain the point of our monetary policy which is to fight inflation and to bring it down back to the 2% in the medium term. And obviously they take into account their imperatives but also the purpose of our mandate to reduce inflation. And I think that I must have repeated many many times the famous triple T which is temporary, targeted and tailored which from our perspective will help them address the needs of the most affected by income erosion and also by inflation but without fueling inflation on a broad basis because that would be utterly counterproductive in that it would require that we take harder monetary policy measures in order to deliver on our mandate. So that's the nature of the debate that we have and we are all attentive to what happens in neighbouring country in the euro area as well and I think that the messages speak for themselves. You asked me about systemic risk. Maybe I would turn it over to you, my dear vice president but I just want to remind you that the ESRB of which I'm the president has actually called the attention of all supervisors and regulators to the need to really focus on buffers and protection against potential risks but please. Well good afternoon first of all. Well in two weeks we will be releasing our financial stability review and there perhaps you know the main messages that we are going to include there is first and there is a deterioration of the financial stability landscape in Europe. This has to do with the outlook lower growth, higher inflation, financial conditions have been tightening so we will refer to the for instance you know the situation of households, corporates, governments. The situation of the banks is positive. Now banks are much more resilient than they were for instance in ten years ago at the beginning of the financial crisis but we have some concerns with respect to the non-banks. In the non-banks taking into consideration the outlook, taking into consideration the situation of inflation, taking into consideration what is happening now in terms of financial conditions then well we have to be very vigilant because we know perfectly that perhaps in a remote corner of the financial system we can have a situation that could become difficult or complicated and to amplify the financial tightening that we have seen over the last months. Thank you Vice President, President and the next question now turning to WebEx I would like to give to Balazs Corani of Reuters. Balazs, over to you please. Good afternoon and thank you for taking my questions. President Lagarde could you please unpack for me your statement that you expect to raise rates further because from the statement the word several is missing but in your reply to Caroline you use the word increases and plural so just to be sure are we looking at several more increases more than one and last time you gave us a number of two to four meetings how does that number look like as it stands now? My second question is regarding Telchos because I'll be honest with you having read your statement it's not any more clear to me what you've done the intention is clear you want banks to repay early clear fine but how, what are the numbers going to look like I know statements coming in a few minutes but if you could give us some numbers so I kind of understand what's going on. Okay I'm so pleased that you're honest with me I want to celebrate that so joke about you asked me about the number of rates and you know in the past I did communicate our intention to move towards the neutral rate as a first step in the normalization process what I'm telling you now is that we have made progress on that normalization path but that we still have ground to cover okay and as we have made those progress I'm also telling you that the ultimate destination that we want to reach is the rate that will deliver the 2% inflation target in the medium term and that rate by the way is not necessarily the rate at which we will have considered that normalization is completed it may well have to go beyond that but what I'm also telling you is that we are going to decide meeting by meeting on the basis of data and using the three categories of considerations that I have mentioned so it might well be several meetings now how several is that will be determined meeting by meeting we know the path, we know the journey we know the destination which is not as clear as a figure that you would like to pin down because we cannot do that we are not even in October at a meeting when we have a set of data that help us have projections outlook for growth, outlook for inflation we will have that in December and we will take all these elements into account to determine what rate by how much rate will be increased and we will see there on, on the basis of data on the basis of possible recession if it unfolds that way on the basis of inflation outlook which will be influenced by that eventual recession on the basis of what we have done, on the basis of the lag time, time lag then we will decide if at the following meeting we also have to proceed along those lines the rate will be the one that delivers the 2% medium term target that we have in order to deliver price stability well on the second point I'm very sorry that you could not read much into the teltro description that is included in the monetary policy statement you will have by the way plenty of technical details as to how it works but let me take a few minutes to explain to you why we made that decision we made that decision for monetary policy reasons now why is that because in the first place when we modified the terms of teltro 3 back in the days of the pandemic we made that decision for monetary policy reasons in order to incentivize banks to go contrary to what they would normally have done which would have been to restrict lending we wanted to support lending and therefore encourage them by offering terms that were very attractive that was the monetary policy background against which we decided to revise the teltro 3 terms and conditions at the time well in between we have been utterly surprised by the unprecedented rise in inflation in a very short period of time that called for a change of our monetary policy stance you've seen that we've moved from negative territory before July to now 175 basis point for the DFR and we've done that because of the change of circumstances now stance is one thing and it's not enough we need to have the best possible transmission and that is the main reason why we are changing the interest rate I'll come to that in a second so that you fully understand the interest rate that will apply as of November we're doing that to make sure that there is no obstacle, that there is no deterrent to the transmission of our monetary policy and that bank will actually transmit the lending rates which by necessity of our monetary policy stance are higher and have to be higher that's reason number one, reason number two it is also going to reduce the size of the overall Euro system balance sheet which also goes in the same direction as our monetary policy stance and third it is also going to increase the pool of collateral that will be available going forward and we know that this is a sensitive issue given the scarcity of such collateral but the key point is proper transmission of our monetary policy and elimination of obstacles that stand in the way of monetary policy and that's why we're doing that in a very simple terms because you will find a technical annex which is fairly complicated but in very simple terms what we are doing is looking out to November 23rd so it gives time to everyone to adjust and to be prepared we are raising the special interest rate which will no longer be the rate that applies but at the end of November 23rd onwards it will be the DFR, that's what we are doing in addition to which we are opening three additional windows during which banks will have the opportunity to pay back if they so wish that's what we are doing Thank you President and the next question goes to Jan Malin of Handelsblatt Jan please I have one question on the forecasts in September and the ECB assumes a growth rate of 0.9% many economists are much more pessimistic and a few days before the governing council meeting several factors materialized with concerning gas and so on would you say that it's fair to say that we are now in the downside scenario which was outlined there and it assumes that the economy will go down by 0.9% recession and my second question is on the initiatives in several countries several governments have decided to take measures to curb the rise in the energy prices what's your view on that does it help the ECB to fight inflation? Thank you Thank you very much for your question so you are referring to the September projections that we produced at our last monetary policy governing council and we had the baseline scenario which for 2023 gave us plus 0.9% and the downside scenario which gave us minus 0.9% and your question really is are we already in that downside scenario and are we not facing the likelihood of a recession in 2023? Number one we will know a lot better at our December next projection exercise when all the data are collected and we can offer you some new projections which will take into account all the developments that take place before the cutoff date that will be shortly before the governing council meeting that's point number one. Point number two we will know a lot better at our next scenario many of the assumptions that we have made at the time have not materialized so in the assumptions we had a complete shortage of Russian gas we are still receiving some Russian gas we had assumed no substitution whatsoever and we have seen in the last few weeks there is a phenomenon of substitutions we had assumed that commodity prices would continue to rise and what we have seen is commodity prices declining and for some of those commodities actually declining significantly so we are not in the assumptions of the downside scenario is that to say that we are in our baseline? No because there have been developments that are hallowed with uncertainty but that are clearly and we say so in the risk assessment in the monetary policy statement which are clearly to the downside and we will incorporate those risks if they materialize in our baseline in December which will give us a chance to have a more accurate picture for both 22, 23 and 24 but when you look at the all the sort of intermediate indicators that we observe in between two projection exercise there is a slow down at play clearly there is a slow down on the positive front we see less supply bottlenecks we still see very strong labor and all the numbers accept the intention to hire but other than that on the positive we see fiscal support in discussion at the moment and I'll come to the end of your question on that front but pretty much all other indicators are pointing downward now you referred to some of the measures that were decided by member states in order to curb energy prices which is you will remember contributing massively to inflation plus 40.7% from September 22 versus September 21 it's a massive increase and a significant contribution to the inflation that we are facing I was going to give you a Normandy response which is not the appropriate way to address it it is all going to depend on how it is designed what kind of transfers are operated and how transfers if such transfers take place are financed and obviously as we say in the monetary policy statement we welcome structural reforms that will target the energy markets in particular and we hope that these reforms can be led and developed by the European Commission for all European members that are responsible Thank you Thank you very much and the next question goes to Martin Arnold of the Financial Times Martin, please Hello Madame Lagarde, I'm sure you've seen the comments by several European leaders including the French President, the Finnish Prime Minister and most recently the new Italian Prime Minister who've all issued critical warnings about the economy into recession crushing demand and warning against these moves in order to salvage the credibility of the central bank and to fight inflation what do you make of these remarks and secondly the markets are pricing in a rate, further rate rises up to about 3% in your deposit rate do you think that's reasonable? Thank you Well thank you very much for your two questions on your first one we have to do what we have to do a central bank has to focus on its mandate our mandate is price stability and we have to deliver on that using all the tools we have and selecting those that will be most appropriate and most efficient that's what we're doing today by deciding a rate hike changing the interest rate of Teltros going forward is that to say that we are oblivious to the risk of recession obviously not and obviously we are concerned particularly about those who have low income and who are more vulnerable to not only the risk of recession but to the reality of inflation and when we fight inflation we think of the mandate but we think about those people who are suffering most from inflation and we will continue to doing so and we believe that in the present set of circumstances given the instruments and the analysis that we can do the decision that we make today is the most appropriate in order to restore price stability which as you know well is critically important for not just the stability of prices but to actually prosper and recover obviously recession likelihood numbers resulting there from will be taken into account in the analysis that we conduct at our next December meeting when we have far more in-depth data and information. On the second question that you ask just as we cannot and will not be dependent we will not and cannot be financial market dependent we take into account financial market expectations we look at them this is one of the elements that enter into our considerations but this is not it and as I said we've got to do what we've got to do our job is price stability markets have to do what they have to do thank you President Lagarde and the next question goes to Robert Kresic of the Croatian television station Nova TV Welcome Thank you so as you probably may have heard Eurozone is about to expand and Croatia will be the next member and what we have witnessed in previous terms usually countries that introduced Euro see mild inflation next after the introduction do you see that we'll be seeing a multiplying effect in Croatia given the raging inflation that we're already seeing in the rest of Europe and in Croatia as well and my second question is we hear a lot especially in Croatia what the introduction of Euro means for Croatia but what does it mean for Euro what's going to be the impact for Eurozone and the rest of the monetary union thank you well thank you very much and as I said to you and to you colleagues from Croatia welcome we're very pleased to have you with us today and I'm personally delighted that Croatia is joining the club it's no longer 19 member states it's 20 member states and as of now as you probably know already 20 governors at the governing council table because your governor is already participating as an observer not participating in the votes actually but he's there with us I know because there's a lot of work that has been going on for the last 12 months at least that a lot of precautions and a lot of measures have been decided by the Croatian authorities both Ministry of Finance and Central Bank of Croatia in order to alleviate the risk of price increases that happen inadvertently as a result of conversion so you know whether it is by way of required comparator of prices in the previous currency versus Euro or whether it is the special accountability of all the price setters I think that Croatia has actually learned from what we all have gone through more than 20 years ago when the Euro was introduced in in a much smaller group of countries and I really hope that all Croatian economic actors will have to you know will feel compelled to to actually respect those requirements which I know are embedded currently now in the draft laws that will be implemented is it going to be multiplied as a result of the fact that there is high inflation and way too high inflation I certainly hope not but you know we'll have to see and I think that it will be the vigilance of the competition and price authorities in Croatia as well as all of you to actually make sure that this is not the case what does it mean to welcome Croatia well first of all I think it's always nice when you have a new member and an additional member in the family and we are certainly thrilled about that it's a country that has made tremendous effort to align with the rules and regulations to comply with the expectations and the requirements that has passed all the tests both under the review of the commission and with our own legal assessment so we are it's a it's a it's a great development that is taking place in very early 23 and it's a it's a vote of confidence for the for the Euro area and we hope to help and certainly to offer the shield of of the Euro. Thank you president and the next question goes to Fabrizio Goria of La Stampa over here. Fabrizio please. Thank you President Lagarde for this opportunity I have two questions actually the first one is about George Ameloni the new Italian Prime Minister that few days ago used very harsh words in order to talk about the ECB decision so do you see those words as a signal of a rising mal content attitude about the ECB path from a founding member of Europe and the second one is about the profitability of banks are you worried about that because of the less the latest decisions about the deposits and rates thank you. Well first of all I don't want to comment political discourses and I would I would certainly refrain from from that. I will simply say that I'll repeat rather that we central bank have a mission which is price stability which is to fight inflation and what people are most concerned about is inflation is the cost of living and I think that with unfortunately the time lag that goes with monetary policy which means that our decisions of today are not going to instantly be reflected in the next week some months so the time lag is in a way playing against us but we have to just account for that and know that but our job is to fight inflation as it stands our job is to restore price stability and to bring inflation back to two percent and to that end select the right interest rate that will deliver that once we have completed the normalization process. On Teltros honestly we have only looked at monetary policy transmission we don't want anything in between the best possible transmission and our monetary policy stance we are very keen to see that transmission unimpaired facilitated accelerated to the maximum possible extent so that people can benefit from this fight against inflation and Teltros as currently calibrated before the decision that we took this morning was an obstacle was a deterrent and it was our duty to complement our stance to facilitate transmission to actually make that decision. Thank you Madame Lagarde and the next question goes to Andres Stumpf of Expansion Good afternoon Madame Lagarde after changing the rules of the Teltro do you feel that you will face important litigation risks? We have chosen this way against others like the reverse tiering that was on the table and also do you think that the collateral scarcity problem will be solved with this because it usually worsens at the years end. Thank you very much. Thank you so much the first test the first motivation is monetary policy and then of course like any decision made by the governing council we have to assess what risks what side effects come with the decision so it has to be proportionate it has to be the most efficient of the potential measures and from all those accounts and taking in due consideration the risk of litigation we believe that this is the best monetary policy decision that we can take in order to accelerate the transmission on the collateral question that you raised I'm not suggesting that it is the panacea and that it will fix the entire problem of collateral scarcity I think that you know was taken into consideration in the decision making process of the governing council but as a third component it will so happen that if the banks decide to repay earlier there will be more collateral available and as such it will facilitate addressing the scarcity but it's not the panacea and not certainly the main motivations and you're right that at year end things become a bit more tense but we are monitoring that very carefully Thank you Madame Lagarde turning back to WebEx I would like to give the floor now to Esha Nelson of the New York Times Esha please Hi good afternoon I'm sorry I couldn't join you in person today I wanted to ask two questions firstly on fiscal policy you've been very clear about the goals that fiscal policy should have in relation to inflation but has any of the decisions taken by European government so far encouraged discussion amongst policy members about the impact they might have on monetary policy and then my second question is on the changes the terms of telters could you just talk a little bit about what you anticipate the real economy impact to be of these changes in these terms thank you very much Thank you so much for your question and next time please come Frankfurt is beautiful and sunny we have the benefit of a very warm October which is helping in many ways even though it is the stigma of something that is far more difficult and dangerous for us all talking about climate change here not regular matters that many of you deal with on the fiscal policy first of all you have to know that the commission is doing a very thorough job in assessing the design, the impact of the energy measures that are decided by various member states and in doing so the commission takes into account the I think they take into account two T's I'm in favour of three T's but it doesn't matter they take into account how temporary those measures are and how targeted they are I'm also concerned that they should be tailored at incentivising the saving of energy by those people who are eligible to the measures that are decided so the commission does that job and has a dialogue with the member states when they decide to implement changes I'll give you an example of a measure which has been adopted by some member states which is to actually provide for a particular price which is typically lower than market price which may have some variation up or down but a particular price up to a certain amount of consumption which is either determined with reference to the past or with reference to the potential necessary consumption and anything in excess of that then is invoiced at market rates that's what I would regard as targeted and temporary by nature because it's framed in that fashion and tailored as well because it gives an incentive to actually stay below the threshold to those people who are eligible that's just by worth example of what in our view can actually work and I'll just repeat that what we want is the best possible transmission of our monetary policy and by removing the very attractive rates that were available for monetary policy considerations of two years ago we are focusing on the transmission that will necessarily lead given that borrowing cost might be higher to lending cost will be higher as well that is inevitable given the monetary stance that we have thank you thank you Madame Lagarde this brings us to the end of today's press conference thank you very much for joining our next regular press conference is scheduled for 15th of December until then all the best and goodbye