important that monetary policy efforts to reduce inflation are complemented by fiscal policy and structural policies, including wage setting. together, these policies determine the overall business environment and hence the market conditions in which firms and consumers operate. complementarity of economic policies will be key to bringing down inflation in the cesee region and preventing a loss of competitiveness and a slowdown in economic convergence. 2 / 2 bis - central bankers'speeches

in national policy support in recent years, including job and income retention measures. the different position of countries in the business cycle is reflected in cross - country inflation differences, which have also been affected by differences in energy import dependence. in both respects, the cesee region is relatively more exposed to inflationary pressures, which increases the risk of a more sustained deviation of inflation from the euro area average. 1 / 2 bis - central bankers'speeches the resilience of our economies has stemmed from both robust domestic demand and better - than - expected export performance after the russian invasion on ukraine. however, geopolitical tensions have increased the uncertainty about the future of global trade integration and the strength of global growth. in the last decade, we are experiencing globalization's turn to " slowbalization ". the supply chain disruptions and geopolitical tensions have made governments around the world reconsider their engagement in the world trade, many of them resorting to nearshoring patterns and shortening production chains. given their strong participation and relatively downstream positioning in global value chains, the cesee countries stand particularly vulnerable to such de - globalization trends that could in the medium - and long - term act in a stagflationary manner. returning to regional trends, domestic factors are becoming an increasingly important driver of inflation in the euro area and the cesee region alike. over the past year, profit margins in the euro area have risen noticeably and wage growth has strengthened against a backdrop of tightness in the labour market. the latter is even more pronounced in the cesee region. the continuation of these trends could threaten the competitiveness of our exporters. at this stage, it is important that fiscal and other economic policies take into consideration their disinflation role and support monetary policy in easing price pressures. failure to coordinate the policy response could result in more persistent inflation rate divergence among economies, which a common monetary policy will not be able to address. slovenia's past experience with high inflation shows that its persistent reduction requires an orchestrated effort of various policies. to conclude, this year has started better than expected after the russian invasion of ukraine and the subsequent energy crisis last year. nevertheless, policy makers face significant challenges, primarily how to tame high inflation without stifling economic growth. we have already done a lot on the monetary policy side, but high and broad - based inflation resonates further action. as the domestic drivers of inflation increasingly come to the fore, it has become even more