based guidance about the timing of liftoff of the policy rate from zero, emphasizing, instead, conditions that need to be satisfied before the federal funds rate target range is adjusted. the committee will assess progress – both realized and expected – toward its objectives of maximum employment and 2 percent inflation. of course, because monetary policy affects the economy with a lag, we should not wait until we have reached our objectives to begin adjusting policy. it goes without saying that we are also mindful of the risks of tightening policy prematurely. we anticipate that it will be appropriate to raise the target range for the federal funds rate when we have seen further improvement in the labor market and are reasonably confident that inflation will move back to 2 percent over the medium term. thus, our policy will be data dependent, and the fomc at upcoming meetings will weigh possible adjustments to the level of the target federal funds rate, based on its assessment of incoming data and the economic outlook. bis central bankers ’ speeches regarding inflation, an important factor working to increase confidence in the inflation outlook will be continued improvement in the labor market. theoretical and empirical evidence suggests that inflation will eventually begin to rise as resource utilization tightens. and while the link between wages and inflation can be tenuous, it is encouraging that we are seeing tentative indications of an acceleration in labor compensation. once we begin to remove policy accommodation, the committee ’ s assessment is that economic conditions will likely warrant raising the federal funds rate only gradually. thus, we expect that the target federal funds rate will remain for some time below levels viewed as normal in the longer run. but that is only a forecast, and monetary policy will, in practice, be determined by the data – primarily data on inflation and unemployment. what about financial stability? we are aware of the possibility that low interest rates maintained for a prolonged period could prompt an excessive buildup in leverage or cause underwriting standards to erode as investors take on risks they cannot measure or manage appropriately in a reach for yield. at this point, the evidence does not indicate that such vulnerabilities pose a significant threat, but we are carefully monitoring developments in this area. u. s. monetary policy spillovers and global interest rates as we consider the decision of policy rate normalization, we are mindful of possible spillovers to other economies, including emerging market and developing economies. in an interconnected world, fulfilling the federal reserve ’ s objectives under its dual mandate requires that we pay close attention to how our

have already pointed out earlier this week. in particular, common equity instruments are first in line to absorb any losses that occur. only after they have been fully used up would additional tier 1 ( at1 ) instruments be required to be written down. this approach has been consistently applied in past cases and will continue to guide the actions of the srb and ecb banking supervision in crisis interventions. 1 additional tier 1 – a market worth roughly eur 250bn – is an important component of the capital structure of european banks. lastly, on the market environment, recall what the ecb governing council emphasised one week ago. the eurosystem's toolkit is fully equipped to provide liquidity support, if needed, and to preserve the smooth transmission of monetary policy. in this context, you will have seen that the eurosystem has increased the frequency of providing 7 - day usd funding from weekly to daily as of this week. this facility, which is backstop - priced, is designed to enhance the provision of liquidity via the standing us dollar swap line arrangements between six major central banks. the take - up so far has been very limited, which is, of course, good news as banks can readily meet usd funding needs in the market. 3. inflation and implications for monetary policy 3. 1 inflation remains much too high now, let me turn to the actual topic of my speech : inflation. at almost 9 %, germany's headline inflation rate [ hicp ] last year was one of the highest since the foundation of the federal republic. february's rate of 9. 3 % – while lower than in the months before – is still far too high. in particular, the recent increase in core inflation - – that excludes volatile energy and food prices – is a concern. importantly, both headline inflation and core inflation in germany will probably remain above the 2 % - mark next year and possibly in 2025, too. the same holds true for the euro area, where ecb staff projections see core inflation rates averaging 2. 5 % and 2. 2 % in 2024 and 2025, respectively [ after 4. 6 % in 2023 ]. 3. 2 interest rates are the primary tool in our toolkit against the backdrop of high inflation, the ecb's governing council has pursued the fastest rate hiking cycle in the euro area's history. in less than a year, it has raised interest rates by a staggering 350 basis points. this underscores