upside risks to the outlook for price stability over the medium term. again, the sharp increase in oil and other commodities has had a major impact on overall inflation. in these circumstances, the central bank must prevent increases in the prices of raw materials from being incorporated into the long - term inflation expectations, which could trigger second - round effects on wages and prices. it is against this background that the governing council decided in april to raise interest rates. i stressed, in reporting this decision, that it had been taken unanimously. the action of the governing council is motivated by a common goal. that decision in april confirmed that the separation principle is strictly applied and that our non - conventional measures do not restrict in any way our ability to toughen the monetary policy stance when facing inflationary pressures. thus, when the governing council decided in april that it was time to raise interest rates, in parallel, at the same time, it decided to keep, in the second quarter, the provision of unlimited fixed - rate liquidity for a period of three months. contributing to economic performance price stability is the best contribution that central banks can make to sustainable economic growth and job creation. i think there is widespread agreement on this among central bankers and academic researchers. in the short run, however, some academic research suggests that there might be a significant trade - off between low inflation volatility and low output volatility. if prices are stable, economic adjustment has to occur through the real economy channel. it may therefore be difficult to achieve these two goals at the same time. the chart shows that the euro area scores relatively well on both dimensions. this is puzzling, given that the euro area has quite rigid product and labour markets, at least compared with the united states. the higher degree of price and wage rigidity in the euro area would suggest that output volatility should be significantly larger in the euro area than in the more flexible us economy. this would be particularly true during a period when the economy is subject to supply - side shocks, which are simultaneously exerting inflationary and recessionary influences. yet surprisingly, and despite the negative supply - side shocks that had been hitting the euro area economy over the years up to 2007, the data suggested that both inflation volatility and output volatility in the euro area were lower than elsewhere. output volatility in the euro area is much higher when the crisis is included in the sample. but, remarkably, the euro area still scores well on both dimensions

held on the eurosystem balance sheet into the market — likely into repos or short - term government securities. this, in turn, could have created additional demand for highly - rated euro collateral, at a time when some segments of money markets, in particular the market for euro area repo and short - term government securities, are showing signs of collateral scarcity ( chart 2 ). the early indications are that the decision on the remuneration of government deposits has been effective. following the announcement of the change in the remuneration of non - monetary policy deposits, the recent increase in the spread between the yield for short - term euro government securities and interest rate swaps has been partially reversed. ( chart 3 ). at the same time, as the change in the ceiling for the remuneration of governments will only come into effect today, the full effects of the measure may only become visible over time, and we remain attentive to the spread between different money market rates as well as collateral scarcity concerns. the temporary change in the remuneration ceiling for government deposits gives government deposit holders extra time to undertake a smooth and gradual return of their deposits to the market. from the ecb ’ s perspective, it remains the case that encouraging market intermediation of these deposits remains desirable in the long term. in the meantime, the temporary change will allow us to assess the adjustments of money markets across market segments to the return to positive interest rates and thereby also reduce uncertainty about the pass - through of the changes in the ecb interest rates to money markets. chart 3 change in 3 - month bill to ois spread de and fr ( left side ) ; change in 2 - year bond to ois spread de and fr ( right side ) ( percentage ) sources : bloomberg and ecb calculations. notes : the charts display the change in 3 - month bill to overnight indexed swap ( ois ) spread and 2 - year bond to ois spread for germany and france between the july and september governing council meetings ( blue bar ) and the change since the september governing council meeting ( yellow bar ). the latest observations are for 13 september 2022. 1. i am grateful to pamina karl for her contribution to this speech. 2. for more general considerations on this new phase of euro area monetary policy, see also lane, p. r. ( 2022 ), “ monetary policy in the euro area : the next phase ”, remarks to the policy panel at the annual