 Good afternoon, everyone. It's a pleasure to be in to open this conference The money market conference is a prominent event in our calendar It is difficult to overstate the importance of understanding money markets for the design and implementation of monetary policy money markets are a seismograph for central bank liquidity central bank liquidity conditions and for market expectations of future policy While of course money market rates are central to the transmission of monetary policy Through the impact on economy-wide financing conditions In recent weeks, there's been volatility in money markets around the world as Traders work to absorb the implications of the recent increase in inflation rates for central bank policy decisions At the ECB our decision-making is guided by our new monetary policy strategy as Demonstrated by the revision of our interest rate forward guidance that we decided in July Essential element in our monetary policy strategy is the principle that if the economy is close to the effect of lower bound It is necessary to adopt especially forceful or persistent monetary policy action To avoid that negative deviations from the inflation target become entrenched Despite the high current inflation rate the analysis indicating that the year area is still confronted with weak medium-term inflation Dynamics remains compelling in particular the backdrop of the adverse demand shocks and positive supply developments during the during the pre-pandemic period in which inflation averaged just 0.9% per year between 2014 and 2019 Has had a persistent impact on price and wage-setting dynamics in 2020 the inflation rate further declined to 0.3 percent on account of the initial adverse pandemic shock to the economy and inflation So the year area has been confronted for an extended period with extensive slack and Weak medium-term aggregate demand conditions, which is also reflected in the chronically large aggregate current count surplus of the era area While fiscal policy has been forced for the counter cyclical during the pandemic Including through the launch of the innovative next-generation EU initiative the capacity of fiscal policy to support aggregate demand dynamics over the medium term is constrained by high aggregate national debt levels and The absence of a permanent central fiscal capacity These factors reinforce our strategic assessment that extensive monetary accommodation is required to ensure that ensure that inflation pressure builds up on a persistent basis in order to stabilize inflation at 2% over the medium term So how do we reconcile the current high inflation rate and the subdued prospects for inflation over the medium term? Our analysis points to three temporary factors that are acting to push up inflation today What are projected to fade over the course of next year? First the pandemic initially exerted powerful downward pressure on inflation In part this was due to the severe drop in the economic activity during 2020 In part in part some policy measures directly contributed to lower inflation in 2020 especially the temporary VAT cut cut cut in Germany so Given the backdrop of 2020 The economic recovery during 2021 and the termination of temporary tax cuts has operated in the opposite direction Temporarily pushing up the inflation rate after having temporarily pushed down the inflation rate in 2020 In particular the base effect of unusually low prices during 2020 has contributed to higher inflation during 2021 But the 2020 unusually low prices will fall out of the inflation calculation Which compares prices today with prices 12 months ago at the end of this year In terms of individual factors the reversal of the temporary German VAT cut is a quantitatively important component Though I will no longer feature in the data in the new year Second the second factor is that inflation pressures related to bottlenecks Can in part be attributed to the attributed to the unexpectedly strong European and global recovery from the pandemic shock So if we go back to the start of the pandemic in the June 2020 your assistance staff macro projections It was foreseen that your area GDP this year in 21 will be four percentage points below the 2019 level in the most recent forecast in this in September at Now the the shortfall in 2021 for the year area is only 1.8 percentage points below the 2019 level Globally if we look at the June 2020 world economic outlook the IMF The forecast at that time was that in the 2021 world GDP would be barely above the 2019 level Just at a 20 basis point differential Whereas now in the October 21 we are at global output this year is 2.6 percentage points above the 2019 level So whether at the European or global level We have a level of recovery in a far in advance of what was expected 15 months ago, maybe when some when some supply capacity decisions are made So the fact that the performance is much stronger than initially expected Which can be attributed to the success of vaccination campaigns and other public health measures Together with extensive policy support around the world But a byproduct of the unexpectedly strong recovery Is that there have been extensive demand supply mismatches in the global markets For commodities and manufactured goods Which of course have been exacerbated by some sector-specific supply disruptions Including in the semiconductor industry There are also mismatches in some segments of domestic labour markets Especially in those services sectors that suffered the most from the severe lockdowns But are now experiencing high demand such as in the hospitality sector However, the nature of such bottleneck bottleneck induced inflation is that is inherent temporary component In particular demand supply mismatches Should be alleviated over time through the expansion of supply capacity Together maybe with some normalization demand patterns following the reopening All else equal if lack of supply is put in upward pressure and prices today The introduction of extra supply over time will operate in the opposite direction as an anti-inflationary force The expansion of supply capacity can also be expected in domestic labour markets Through the reversal of the pandemic related drop in the labour force participation rate And the return of the many international workers that have temporarily gone back to their home countries Third the largest single contributor to the currently high inflation rate has been the surge in energy prices While energy inflation has been influenced by both base effects Since energy prices dropped sharply in 2020 And bottleneck effects demands supply mismatches have been extensive both oil and natural gas The contribution of energy to overall inflation Is typically stronger in the near term than in the medium term Also due to the adverse macroeconomic impact of high energy prices In particular since the euro area is a significant net importer of energy An increasing global energy prices Constitutes a negative turns of trade shock Depressing the net revenues of european firms under disposable income of european households This adverse aggregate demand channel means that an energy price shock Can simultaneously raise headline inflation But all else equal exert downward pressure on the part of underlying inflation So taking together these three factors base effects bottleneck effects and And energy prices explain why inflation is temporarily high And at the same time provide solid reasons to expect inflation to decline through the course of next year So in relation to the connection between disinflation analysis And our interest rate policy It is always necessary to keep in mind that monetary policy affects the inflation rate only with a considerable lack In particular an abrupt tightening of monetary policy today Would not lower the currently high inflation rates But work would serve to slow down the economy and reduce employment over the next couple of years And thereby reduce medium term inflation pressure So given our assessment that the medium term inflation trajectory Remains below our 2% target. It will be counterproductive to tighten monetary policy at the current juncture In particular our new forward guidance specifies three conditions That need to be met before we would start raising our policy rates The first condition is that the governing council sees inflation reaching 2% Well ahead of the end of its projection horizon The second condition is that the 2% target is reached durability But the rest of projection horizon And the third condition as the governing council judges that realize progress and underline inflation Is sufficiently advanced to be consistent with inflation stabilizing at 2% of the medium firm So with regard to temporarily high inflation The requirement that we need to see inflation reaching 2% Not only well ahead of the end of our projection horizon But also durability for the rest of the projection horizon Ensures that interest rate policy will not will not react to inflation shocks That are expected to fade away before the end of our projection horizon Which of course will include 2024 in the december round Moreover the condition that realize progress and underline inflation is sufficiently advanced To be consistent with inflation stabilizing at 2% over the medium term Serves as an important purpose in our analysis of the incoming data It sharply differentiates between the volatile components of headline inflation And the dynamics of underline inflation Which is the persistent component that is the best guide to medium term inflation dynamics Now of course in assessing underline inflation It is critically important to filter out the temporary effects The temporary impact of base effects and bottlenecks on goods inflation and services inflation This is clearly a challenge right now In any event persistent component in wage dynamics will be central in the assessment of underline inflation Especially in view of the high share of services in the overall price level And the high share of labor and services value added Accordingly tracking wage outcomes of course adjusted for productivity And differentiating between transitory influence and persistent components in wage settlements Will be pivotal in assessing progress in the realized part of underline inflation In particular a one-off shift in the level of wages As part of the adjustment to a transitory unexpected increase in the price level Which is what we're seeing this year does not in itself imply a trend shift in the part of underline inflation Now of course in addition to rate forward guidance The calibration of asset purchases also plays a major role in in insurance That the monetary stance is sufficiently accommodative To deliver the timely attainment of our 2% market in the medium term In particular the compression of term premia True to duration extraction channel Is quantitatively significant in determining longer term yields And ensure ensuring that financing conditions Are sufficiently supportive to be consistent with the delivery of our median term inflation objective Finally, it is vitally important that the ECB is always attentive To the full risk distribution of possible outcomes Rather than focusing solely on the baseline assessment In our latest monetary policy meeting we assessed that in the near term Supply bottlenecks and rising energy prices are the main risks To the pace of recovery and the adequate inflation So if supply shortages and higher energy prices last for longer These factors could slow down recovery At the same time if persistent bottlenecks feature into higher than anticipated wage rises Or the economy returns more quickly to full capacity Price pressures could become stronger However, in terms of upside economic activity could also add performer expectations If consumers become more confident and save less than currently expected So we will be continually reassessing these risk factors in line with incoming data flows So with that, let me again Reiterate Luke's welcome and wish you the best from sure It's going to be a very nice conference over the next two days So back to you