up inflation to levels not seen since the introduction of the euro. in response, we started a gradual reduction in our asset portfolio and we increased our policy rates by a total of 450 basis points. our strong reaction was key to prevent a deanchoring of expectations and to curb inflation. in terms of economic activity, the slowdown has so far been contained and gradual. however, the incoming data indicate that the future remains uncertain, and the prospects tilted to the downside. the inflationary shock that we were confronted with following the energy crisis has been particularly challenging : it occurred in an already difficult environment, with the world economy recovering from the pandemic and global supply chains still disrupted. furthermore, supply side shocks are particularly difficult to manage using monetary policy instruments. in this context, sustainable and investment - oriented fiscal policies aimed at promoting the energy transition, strengthening the resilience of supply chains and increasing euro area productivity are supportive of our price stability goal. structural reforms and investments to enhance the euro area's supply capacity can help reduce price pressures in the medium term. in this regard, we very much welcome the agreement on the eu's economic governance framework reached a few weeks ago. it is a powerful signal to markets as it reduces uncertainty about fiscal rules in the eu. the reformed framework will help strike a balance between sustainable public finances and sufficient debt reduction on the one hand and room for reforms and investment on the other, while supporting 3 / 4 bis - central bankers'speeches countercyclicality of fiscal policies. achieving this balance turned out to be less straightforward than we might have hoped. it is now crucial that the new fiscal framework is implemented properly and without delay. thank you for your attention. 4 / 4 bis - central bankers'speeches

luis de guindos : the economic outlook and monetary policy in the euro area speech by mr luis de guindos, vice - president of the european central bank, at the 14th edition of spain investors day, madrid, 10 january 2024. * * * over the past two years, economic developments in the euro area have been shaped by the easing of pandemic - related supply constraints and by the energy price shock in the wake of the russian invasion of ukraine. before that, inflation had been low and monetary policy accommodative, but the surge in inflation to unprecedented levels in 2022 prompted the ecb to normalise and tighten monetary policy. in december 2021 we announced a gradual reduction in our asset portfolio and in july 2022 we increased our key interest rates for the first time in 11 years. this was followed by nine consecutive hikes that raised interest rates by a total of 450 basis points by september last year. in 2023 a lot of progress was made in curbing inflation. however, more needs to be done to ensure a timely and sustainable return of inflation to our 2 % medium - term target. in my remarks today i will provide an overview of the latest economic developments and the rationale behind the monetary policy decisions that we took in december. i will then discuss the outlook for the euro area economy for the coming months. inflation 2023 ended with an inflation rate of just below 3 % in december, which was good news. the uptick from november was widely expected, reflecting base effects and the withdrawal of energy support measures. euro area inflation had been above 10 % in october 2022 and at 8. 6 % at the start of 2023. the decline in 2023 affected all the main components of headline inflation, confirming a broad - based disinflationary process that gained momentum in the second half of the year. food inflation has declined substantially from its peak of over 15 % in march 2023, but remained high at just above 6 % in december. energy inflation remained deep in negative territory in december, recording the eighth consecutive decline since may 2023. another important aspect is that core inflation entered a clear downward trajectory, continuing to decline to 3. 4 % in december. services prices have been slower to recede, but they fell sharply in november and remained stable in december. taken together, these trends reflect the indirect effect of falling energy prices, the easing of supply bottlenecks and the increasing pass - through of our monetary policy tightening