1 january. it is because europeans have seized the opportunity to play an active part in the euro changeover that we can already pronounce this unprecedented move a tremendous success. with the introduction of the euro banknotes and coins, the euro has ceased to be a currency familiar only to the financial markets, to financial institutions and large enterprises. on 1 january at 00. 00 hour, the introduction of the euro banknotes and coins marked not only the completion of economic and monetary union, which is a crucial achievement in itself, but one of the major, if not the major step forward in the history of european integration. i am convinced that 1 january 2002 will appear in the history books in all our countries and beyond as the start of a new era for europe.

uncertainty. this means that gauging risks to the inflation outlook becomes particularly important. overall, these risks remain tilted to the upside. one major risk factor is upward surprises to energy prices due to scarce and uncertain supplies. this is especially the case in europe. and especially for natural gas, given the ongoing geopolitical risks. over a slightly longer horizon, there is another upside risk to inflation. government policies that aim to cushion the impact on households of the high energy prices may be inflationary to the extent that they do not merely target those people that lack the financial resources to pay the higher costs. and of course, there is the very real risk of second round effects, that i will come to later. * at the same time, growth is slowing down. according to the flash estimate, euro area real gdp grew by 0. 2 % q - o - q in the third quarter of this year. this is down from 0. 8 % in the previous quarter but slightly higher than expected by ecb staff in september. looking forward, according to ecb staff forecasts from september, growth is projected to decline further in the fourth quarter of 2022, then come to a standstill, and start recovering in the second quarter of 2023. incoming soft data since september suggest that the economic outlook has deteriorated further and that the risk of a recession has increased. so, what is weighing down on growth? there are at least four factors : high inflation, high uncertainty, rising interest rates, and the fading effects of the reopening from the great lockdown. slower growth is necessary to bring inflation down, but it is far from certain that slower growth or a mild recession alone will be enough to drive inflation back to levels around 2 %. there are two main arguments for being resolute about pursuing price stability. and by being resolute i mean that we will persist in our efforts until we have reached our goal, no matter how difficult this proves. first, in an uncertain environment in which inflation is persistently high and continuously underestimated, high inflation may get entrenched in people ’ s minds. let me explain. the longer inflation remains above target, the greater the risk that it will affect firms ’ and households ’ expectations and economic decisions. these second - round effects would reflect a switch from a regime of “ rational inattention ” in which firms and households largely ignore inflation numbers, to a regime of “ rational attention ” with high inflation firmly on their