1 / 5 bis - central bankers'speeches the stickiness of inflation might require current ( high ) rates for longer than previously expected. some sectors in the financial system like commercial real estate or private credit could deteriorate. inflation is receding, and most advanced economies are forecast to reach 2 % by 2025 by the imf. the latest inflation results, e. g. for the us and the uk, point toward fewer rate cuts in 2024, and some market participants in the us even told us that they expect no rate cuts by the fed in 2024 at all. labor markets remain strong, and unemployment is historically low. especially in the us, the labor market is fueled by immigration, and migrants are integrated into the labor market quickly. international trade shows signs of recovering but is still far from prepandemic levels. risks are tilted to the downside, especially if disruptions in the red sea escalate. however, some countries already face high fiscal deficits in parallel with high debt. in addition, 2024 is an important electoral year : 64 countries in the world elect their government. thus, fiscal expenditure might go up and the results of elections, especially in the us, might alter geopolitics, trade and capital flows. besides the near - term challenges already discussed, other longer - term structural challenges remain : weak productivity : total factor productivity is low, as well as innovation efforts. population aging, especially in advanced economies. this puts pressure on the pension and healthcare system, reduces the workforce as well as innovation. geopolitical fragmentation and conflicts, and their effect on movement of trade and capital. these deliberations bring me directly to the first main topic which i want to discuss today : 2. inflation and the normalization of monetary policy as you all probably know, the eurosystem increased interest rates 10 times to 450 basis points in the last two years to fight exceptionally high inflation. the eurosystem's latest inflation number is 2. 4 % ( eurostat flash estimate for march ) and a recent ecb forecast assumes inflation rates of 2. 0 % and 1. 9 % for 2025 / 26. so, we are approaching our target of 2 %. many financial market participants currently anticipate a first key interest rate cut in june. however, let me reiterate that the ecb will continue to follow a data - dependent and meeting - by - meeting approach to determining the appropriate level and duration of restriction.

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