in germany were expecting inflation of 3. 4 % on average over the next five years. according to the survey results, firms in germany have changed their price setting behaviour as well, albeit probably not as strongly as their inflation expectations. in particular, the percentage of firms expecting to increase their own prices reached 82 %. during the summer of 2021, this figure was five percentage points lower. to assess the possibility of price - wage spirals, it would also be beneficial to have data on the wage expectations of households and firms. the bundesbank will start adding a first set of wage - related questions to the coming survey waves so that we may help close this data gap soon. 4 implications for monetary policy the question that arises now is this : does the recent surge in inflation expectations pose any direct threat to price stability? in my view, the evidence gathered from the bundesbank online panels suggests that risks to price stability exist. but let me explain in more detail. it is clear that average inflation expectations over the next five years are, by construction, influenced by expectations for the coming year. one way to shed light on the average inflation expectations for the period between two and five years is to extract these from the one - year and five - year expectations. in may, this number was 4. 9 %, which is only slightly lower than the 5. 3 % that households in germany are expecting on average over the next five years. one year ago, if calculated in this way, average expected inflation for the period between two and five years was 4 %, so the number has gone up by about one percentage point. 3 / 5 bis - central bankers'speeches we could also apply the same arithmetic to the inflation expectations of firms. thus, in may, the calculated two - to five - year average was 4. 2 %. the corresponding increase since january comes to one percentage point. but it has to be said that we do not know whether households and firms apply equal weighting when answering the questions. so for the time being, survey evidence suggests that inflation expectations of households and firms in germany are somewhat less anchored than, say, a year ago. accepting the difference in levels compared to professional forecasters that i alluded to before, the increase is worrying. of course, besides considering households'and firms'survey expectations, we also analyse the long - term inflation expectations of professional forecasters as well as those extracted from financial market data. so far, the average levels of these

was established for seven countries, including the euro area countries france, italy, belgium, slovakia and malta. it will be crucial to implement the new rules in such a way that high debt ratios actually fall. this would require setting ambitious targets, and governments would then have to comply with them more ambitiously than in the past. setting priorities will remain the key fiscal policy challenge at any rate and this will not get any easier if additional expenditure, for example for climate action, defence or in view of demographic pressures, is moved higher on the priority list. this is true even in germany, where the debt ratio is no longer far from the 60 % limit. in this case, it may indeed make sense to expand the fiscal scope somewhat by means of a moderate reform of the debt brake just as long as germany complies with the european debt rules. the bundesbank has put forward proposals to achieve that goal. 5 concluding remarks ladies and gentlemen, after three questions and three topics, i would like to end with a triad. democracy, freedom and openness are core values on which our society, our daily coexistence, and 6 / 7 bis - central bankers'speeches our prosperity are based. we are living in challenging times. this is exemplified by the elections in france and three eastern german federal states as well as, this coming november, in the united states. for the future, it remains to be hoped that we can maintain democracy, freedom and openness as a secure basis. thank you for your attention. 1 konjunktur : wirtschaft in euro - zone wachst – jedoch nicht in deutschland ( wiwo. de ), wirtschaft in euro - zone wachst trotz bremsklotz deutschland 0, 2 prozent ( msn. com ) 2 european central bank, higher profit margins have helped firms hoard labour, economic bulletin, issue 4 / 2024, pp. 54 - 58. 3 see nagel, j., reflections on the eurosystem's new operational framework | deutsche bundesbank, speech at the konstanz seminar on monetary theory and monetary policy, 16 may 2024. 7 / 7 bis - central bankers'speeches