intensified recently : there has been an increase in merger activity, an establishment of alliances and an introduction of new products and services, often based on modern information technology. the process of structural change contains risks, but if these risks are identified early and analysed carefully, they do not present a threat to financial stability. after all, we are talking about decision - making and planning by people who are dealing with risks every day at the highest professional level. in this regard, the smooth changeover of the financial system to the euro demonstrates the virtues of efficient and careful forward planning. third, i do not view efficiency and stability of the financial system as being contradictory. in many ways these qualities actually support each other by laying a firm foundation for the financial system. an inefficient financial system, in addition to being costly to society, can be more vulnerable to shocks. at the ecb, we play our part in the evolution of the euro area financial system by providing it with stable monetary conditions. by creating an environment of price stability, we allow private sector agents to focus their attention on the questions that are most relevant to their activities and to take advantage of the benefits of this stable environment, such as the lengthening of their planning horizons.

consistent with inflation sustainably returning to target if inflation turns out to be more persistent than anticipated. in the other direction, keeping rates overly restrictive for too long could push inflation below target over the medium term. this would require corrective action through a subsequent acceleration in rate cuts that could even require having to descend to below - neutral levels to fix any persistent drift towards a below - target inflation trend. in deciding on the appropriate policy rate path, we will continue to follow a data - dependent and meetingby - meeting approach to determining the appropriate level and duration of restriction, and we are not precommitting to a particular rate path. this approach has served us well in the tightening cycle and many of the same considerations will apply during the unwinding phase. 1. in relation to staff projections of various indicators, i rely on the march 2024 exercise. the projections from the june 2024 exercise will be published after our 6 june monetary policy meeting. 2. see banbura, m., bobeica, e., bodnar, k., fagandini, b., healy, p. and paredes, j. ( 2023 ), “ underlying inflation measures : an analytical guide for the euro area ”, economic bulletin, issue 5, ecb. on the importance of energy inflation and other supply shocks in explaining the rise and fall of inflation see also : afrouzi, m., bhattarai, s. and wu, e. ( 2024 ) “ relative - price changes as aggregate supply shocks revisited : theory and evidence ”, mimeo ; arce, o., ciccarelli, m., kornprobst, a., & montes - galdon, c. ( 2024 ). what caused the euro area post - pandemic inflation? ecb occasional paper, no. 343 ; dao, m. c., gourinchas, p. - o., leigh, d. and mishra, p. ( 2024 ) understanding the international rise and fall of inflation since 2020, mimeo. 3. the medium - term services inflation rate that is consistent with sustainably meeting the target of two per cent for the headline inflation rate will depend on the structural factors driving the medium - term relative price trends across energy, food, goods and services. 4. comment on lci indicator. 5. see s. holton, g. koester ( 2024