rise in inflation does not give rise to broad - based inflationary pressures over the medium term. strong vigilance is warranted with a view to containing upside risks to price stability. overall, the governing council remains prepared to act in a firm and timely manner to ensure that upside risks to price stability over the medium term do not materialise. the continued firm anchoring of inflation expectations is of the essence. turning to fiscal policies, all governments need to fully implement their fiscal consolidation plans in 2011. where necessary, additional corrective measures must be implemented swiftly to ensure progress in achieving fiscal sustainability. beyond 2011, countries need to specify ambitious and concrete policy measures in their multi - year adjustment programmes, so as to underpin the credibility of their fiscal consolidation targets of ensuring a rapid correction of excessive deficits and returning to a close - to - balance or surplus position. strengthening confidence in the sustainability of public finances is key, as this will reduce interest rate risk premia and improve the conditions for sound and sustainable growth. at the same time, it is crucial that substantial and far - reaching structural reforms be implemented in the euro area to strengthen its growth potential, competitiveness and flexibility. in the case of product markets, policies that enhance competition and innovation should, in particular, be further pursued. on the labour market, the priority must be to enhance wage flexibility and incentives to work, and to remove labour market rigidities. the current sovereign debt crisis in the euro area has reinforced the need for an ambitious reform of the economic governance framework of the euro area. the governing council of the ecb is of the view that the legislative proposals which have been put forward by the european commission go some way to improving economic and budgetary surveillance in the euro area. however, they fall short of the necessary quantum leap in the surveillance of the euro area which is necessary to ensure the smooth functioning of economic and monetary union. as outlined in the ecb ’ s opinion of 17 february 2011 on these proposals, more stringent requirements, more automaticity in the procedures and a clearer focus on the most vulnerable countries with losses in competitiveness are required to ensure that the new framework will indeed be effective in the long run. we are now at your disposal for questions. bis central bankers ’ speeches

virtual annual meeting, frankfurt am main, 8 january. 3 other factors could include a change in the way globalisation affects the price and wage formation process, the ongoing digitalisation of our economies as well as demographic developments. 4 see also lagarde, c. ( 2022 ), “ european parliament plenary debate on the ecb annual report ”, introductory statement at the plenary session of the european parliament, strasbourg, 14 february. 5 see also schnabel, i. ( 2021 ), “ asset purchases – from crisis to recovery ”, speech at the annual conference of latvijas banka on " sustainable economy in times of change ", frankfurt am main, 20 september. 6 recent ecb research has shown that asset purchases have a stronger effect on house prices than changes in short - term interest rates. see also schnabel, i. ( 2021 ), “ monetary policy and inequality ”, speech at a virtual conference on “ diversity and inclusion in economics, finance, and central banking ”, frankfurt am main, 9 november. 7 see also schnabel, i. ( 2021 ), “ monetary policy and financial stability ”, speech at the fifth annual conference of the european systemic risk board, frankfurt am main, 8 december. 8 see also schnabel, i. ( 2021 ), “ the rise of non - bank finance and its implications for monetary policy transmission ”, speech at the annual congress of the european economic association ( eea ). 8 / 8 bis central bankers'speeches