to zero. supply of credit, economic activity and inflation. 2 hence, there is a lower bound to nominal interest rates. this lower bound introduces an asymmetry into the conduct of monetary policy. this asymmetry means that monetary policy is potentially very effective in combating high inflation episodes, but less so in combating deflation or even persistently low inflation. 3 in the years that followed the great financial crisis, in a context of significant disinflationary pressures, the proximity of interest rates to their lower bound led the ecb to introduce a set of non - standard measures to provide sufficient monetary stimulus to preserve price stability. among these measures, the asset purchase programme ( app ), the targeted longer - term refinancing operations ( tltros ) 4 and the forward guidance on the future path of interest rates can be highlighted. see, for example, brunnermeier and koby ( 2018 ) for a discussion of the effect of interest rates on banks ’ profitability and their ability to lend. see banco de espana ( 2019 ) for a detailed discussion. andreeva and garcia - posada ( 2019 ) estimate the impact of tltros on banks ’ lending policies in the euro area. even though there is a broad consensus that these non - standard instruments have been effective in easing financing conditions and in supporting euro area inflation, economic growth and employment, their expansionary effects did not prevent inflation from remaining persistently below the ecb ’ s target for much of the last decade. this led the ecb to review its monetary policy strategy in order to search for ways to better fulfil its price stability mandate. 2 main elements of the ecb ’ s new monetary policy strategy the unanimous adoption in july 2021 of a new monetary policy strategy was an important achievement for the eurosystem. this new strategy has drawn on an immense collective effort by the staff at the ecb and the eurosystem national central banks over 18 months. among the many new developments that this review has brought with it, let me now focus very briefly on three key aspects. for those interested, i provide a more comprehensive description of the new strategy in my article “ the european central bank ’ s new monetary policy strategy ”, the euro yearbook 2022. first, the ecb has adopted a new medium - term inflation target of 2 %. this target is symmetric in the sense that positive and negative deviations of inflation from the target are considered equally undesirable

bostjan vasle : opening address for governor madis muller's lecture opening address by mr bostjan vasle, governor of bank of slovenia, for governor madis muller's lecture entitled " why is inflation so high and so different in different euro area countries? ", ljubljana, 3 march 2023. * * * the spoken word applies. ladies and gentleman, esteemed colleagues, good morning and welcome to banka slovenije, and also to all of you following us over the video link. it is my great pleasure today to have the opportunity to host my dear colleague mr madis mueller, governor of the bank of estonia. * * * the topic of his lecture will be inflation. more precisely, identifying the drivers of elevated inflation and why there are such big differences in the level of price growth rates between member states. according to the latest data, published yesterday, the lowest rate of inflation in february was recorded in luxembourg, 4. 8 %, and the highest in latvia, with 20. 1 %, while the average rate was 8. 5 %. estonia recorded an inflation rate of 17. 8 % and slovenia one of 9. 4 %. these are all - time - high inflation differentials within the euro area. needless to say, these are figures which are uncomfortably high, for households, enterprises and, sovereigns alike. and the increased public concern about inflation is also reflected in the results of the autumn eurobarometer survey, where more than 90 % of europeans ranked the rise in the cost of living as the number one issue of concern. and of course it is also a concern for us central bankers, whose mandate is price stability. * * * that is why we reacted already last year, when inflation increased further after the russian aggression on ukraine, with all its consequences for global markets and prices. let me briefly remind you that just one year ago our policy was still very accommodative, with our main interest rate at - 0. 5 % and expanding programmes of asset purchases, pepp & app. then in april, we changed course, firstly by ending net purchases under pepp, followed three months later with ending net purchases under app. 1 / 2 bis - central bankers'speeches in july, we raised our main interest rates for the first time in about a decade. firstly by 0. 5 percentage point to 0 %, followed by two increases of 0. 75 percentage point each, followed by two increases of