the governing council's forward guidance. furthermore, we approved the transmission protection instrument ( tpi ) as a tool to support the effective transmission of monetary policy with strict preconditions. we would activate the tpi only if the yields on government bonds diverged too greatly, without fundamental justification, and if this endangered price stability. since july 2022, we have increased the ecb's key interest rates by 450 basis points. moreover, we have started to reduce our balance sheet. we have phased out the reinvestment of maturing assets under the asset purchase programme. and we have recalibrated the terms and conditions of the third series of targeted longer - term refinancing operations ( tltro iii ). over the past twelve months, the volume of our balance sheet has decreased by 1. 7 trillion euros, which corresponds to one - fifth. nevertheless, it will still take many years for the balance sheet to return to a size which is appropriate for normal times. with regard to key interest rates, the ecb governing council currently considers them to be at levels that will make a substantial contribution to inflation returning to our target in a timely manner, provided that these levels are maintained for a sufficiently long period. however, it is not yet clear whether this hiking cycle is now over. this sequence of interest rate hikes was the largest and steepest in the history of the single currency. it is all the more encouraging, then, that the euro area banking system has coped well with the interest rate turnaround so far. the supervisory and regulatory reforms in the wake of the financial crisis have certainly contributed to this. they have increased the resilience of the banking sector. we hope that the agreed reform of the esm treaty will soon be ratified by all member states. the reform would give the esm a new function as fiscal backstop for the single resolution fund and, thus, improve the bank crisis management framework. 3 future decisions 3. 1 data - dependent approach with regard to monetary policy, we will continue to follow our data - dependent approach and make our decisions on a meeting - by - meeting basis. this means that our future decisions will continue to be based on the following : the assessment of the overall inflation outlook in light of the incoming data ; the dynamics of underlying inflation ; and the strength of the monetary policy transmission mechanism. at our next meeting, the december eurosystem staff projections for inflation and economic output will be available. we will

this is important for both of our countries, where positive momentum is expected to come from private consumption and exports. italy's annual growth rate is expected to accelerate from 0. 7 % this year to 0. 9 % in 2024 and 1. 2 % in 2025. in germany, the weak foreign demand for goods and high energy prices are weighing especially heavily on german industry at present. the commission's experts forecast a 4 / 5 bis - central bankers'speeches contraction of 0. 3 % this year. based on the assumption that both domestic and foreign demand will recover, they expect gdp growth to pick up to 0. 8 % in 2024 and 1. 2 % in 2025. 5 conclusion ladies and gentlemen, please now allow me to conclude. when it became apparent that the recent surge in inflation was not just a result of transitory cost - push shocks, there was agreement among the members of the ecb governing council that decisive action was needed. and we delivered. the eurosystem responded with the sharpest policy tightening in its history. the main effect of this policy tightening on inflation is yet to take hold. we are determined to stay the course and deliver on our objective of price stability. premature easing could prove to be a mistake, as inflation could stay at an elevated level or even start to accelerate again. in that case, we would have to tighten monetary policy once more, and the dampening impact on the economy might be even larger than it would have been otherwise. research on past episodes of inflation has shown that a number of countries did, in fact, celebrate prematurely. 2 this is a clear and present danger. we must not fall into this trap. i will leave it there, and i now look forward to the discussion with you all. thank you very much. 1 european commission, autumn 2023 economic forecast : a modest recovery ahead after a challenging year, 15 november 2023. 2 ari, a., c. mulas - granados, v. mylonas, l. ratnovski and w. zhao ( 2023 ), one hundred inflation shocks : seven stylized facts. imf working paper wp / 23 / 190. 5 / 5 bis - central bankers'speeches