now more important than speed ; the duration for which we will maintain rates is now more important than the precise terminal level we will reach. or in other words, for interest rates as with ballistics, " longer " is becoming more significant than " higher ". c. hence, our next rate decisions should not focus such attention ; we already have completed most of our rate - hiking journey, and we are clearly in restrictive territory. that said, as i said already last january, i expect today that we will be at the terminal rate not later than by summer, which starts in june and ends in september. hence we have three possible governing councils either to hike or to pause ; but don't deduce a guidance from this or a preference for a given terminal rate. we will remain data driven, looking meeting by meeting at the outlook for headline as well as for underlying inflation. monetary policy is at work and rest assured, we'll do the job : we'll bring inflation back towards 2 %. we'll do it with the necessary patience – looking at the 2025 horizon for full transmission, with persistence – maintaining restrictive interest rates for long enough, and pragmatism – monitoring actual economic data. but once more, monetary policy cannot be the only game in town. fiscal policies should adjust and consolidate, first and foremost scrapping energy subsidies as the european commission rightly advocated yesterday ; wage negotiations and mark - up decisions by firms should incorporate the expected decrease in inflation ; and still more, structural reforms are needed more than ever to increase the supply - side capacity and flexibility in europe and in france. 3 and 2 / 3 bis - central bankers'speeches this is where capital markets union would greatly help to finance investment and innovation, and hence reduce inflation. let us acknowledge it : if we are lagging behind today in europe, it's in this domain of supply transformations, and not in monetary policy. 1 smets and wouters ( 2005 ) ; see also ecb nawm model presented in p. lane's lecture on 16 / 02 / 2023, " the euro area hiking cycle : an interim assessment ". 2 badinger and schiman ( 2023 ), measuring monetary policy in the euro area using svars with residual restrictions american economic journal : macroeconomics 2023, 15 ( 2 ) : 279 – 305, or ; see also ecb - base model. 3 francois villeroy de galhau, letter to

and instead, out of necessity, became non - regular workers, taking on part - time jobs or temporary work. if these people were to become regular employees, wages, productivity, and tax revenues including social insurance contributions would rise. this is desirable not only for them individually, but also for japan as a whole. of course, if we set too much store by the " high - pressure economy " argument - - which suggests that labor market conditions should be kept tight through monetary easing - monetary policy may be tightened too late despite signs of inflation, potentially leading to intolerably high inflation. while i think that the " high - pressure economy " argument is probably correct, in actual monetary policy conduct, we should prioritize the 2 percent inflation target and regard further improvements in employment and increases in the growth rate as desirable to the extent that they can be achieved. furthermore, the fiscal situation is also improving. chart 4 shows the fiscal balance of the general government divided by nominal gdp. as can be seen in the chart, the government deficit relative to gdp deteriorated sharply to 8 percent in the wake of the global financial crisis in 2008. it remained at that level for a while, but has improved by 6 percentage points since 2013 and now stands at about 2 percent relative to gdp. part of the improvement of course is due to the consumption tax hike in 2014, but the tax hike accounts for only 8 trillion yen or 1. 5 percentage points of gdp ; the remaining 4. 5 percentage points are due to the economic growth brought about by economic measures such as qqe. 10 moreover, the amount outstanding of government debt relative to nominal gdp, as shown in the chart, peaked in 2014 and has been declining since. the improvement in the fiscal genda yuji et al., shushoku hyogaki sedai no keizai, shakai eno eikyo to taisaku ni kansuru kenkyu iinkai hokokusho [ report of the study group on the effects of the employment ice - age generation on the economy and society as well as countermeasures ] ( tokyo : japanese trade union confederation research institute for advancement of living standards, october, 2016 ). ministry of finance, nihon no zaisei kankei shiryo [ japan's fiscal condition ], april 2017, 22. situation to a considerable extent also owes to the improvement in the economic situation due to economic measures including qqe. chart 4 improvements in the fiscal