measures are still close to 2 %, but there are initial signs of above - target revisions, and according to some empirical approaches, the risk of inflation expectations becoming de - anchored has risen over the past months. this is in line with the survey evidence presented here. moreover, second - round effects arising from the increase in short - term inflation expectations could prolong the current surge in inflation. furthermore, the external factors in inflation risks – russia's continuing war as well as a possible resurgence of the pandemic – persist. this is raising the question of the appropriate monetary policy response. as members of the ecb governing council, we must ensure that elevated inflation does not become entrenched in the medium run. as you probably know, at the governing council meeting of 9 june, we decided to end the app net purchases as of 1 july. at its july meeting, the governing council intends to raise the key ecb interest rates by 25 basis points. moreover, we expect to raise the key ecb interest rates again in september. the magnitude of this rate hike will depend on the updated medium - term inflation outlook. if inflation prospects persist or deteriorate further, a higher increase will be appropriate. currently, in my view, central banks must not respond with too little, too late. if monetary policy falls behind the curve, even stronger hikes in interest rates could become necessary to get inflation under control. this would create much higher economic costs. the timeliness of monetary policy actions is another area where inflation expectations come into play. we need to give households and firms clear and timely signals that we are determined to ensure price stability. such signals contribute to lower inflation expectations and help bring inflation back to target. 5 concluding remarks ladies and gentlemen, dear colleagues, let me conclude. 4 / 5 bis - central bankers'speeches effective tools for inferring inflation expectations are gaining notably in importance. i am confident that expectation surveys will continue to prove very valuable for central banks. at the bundesbank, we are constantly working on improving our online panels to better understand and measure the process of expectation formation. reliable expectation data are indispensable these days for identifying fundamental risks to price stability – risks of de - anchoring of inflation expectations and price - wage spirals – at early stages. we'll be keeping a close eye out for early - warning signs in the survey data. now i am pleased to give the floor to governor villeroy de galhau. 1 deutsche

developments. today, the surveys provide important insights when it comes to monitoring and analysing inflation dynamics. inflation was ignited mainly by two external factors : the pandemic and how it affected the economy, and the effects of russia's war against ukraine on energy and food prices. and these two factors continue to pose upward risks to future inflation. besides these two exogenous aspects, there are two other factors that present endogenous risks to price stability in the months to come. we are therefore closely watching all sources of data on these endogenous factors. one factor is what are known as price - wage spirals – price increases driving up wages, which in effect drives up prices again, and so on. the other endogenous factor is inflation expectations. inferring the dynamics of inflation expectations is crucial for evaluating the risk that current inflation will become entrenched over the medium term. 2 / 5 bis - central bankers'speeches for both these factors, survey data can help provide timely information. before we turn our attention to the current findings, it is worth mentioning that inflation levels typically expected by households and firms tend to exceed those anticipated by professional forecasters, which are usually in line with the published figures. this finding holds in general and worldwide, and it is also found in the bundesbank survey. still, the changes and trends in households'and firms'expectations are both plausible and mostly comparable to those of professional forecasters. 2 what are our survey results on inflation expectations? let us focus on households'and firms'expectations for average inflation over the next five years. in may, households in germany were expecting average inflation for the next five years to be 5. 3 %. the figure thus exceeded 5 % for the second month in a row. when the pandemic began, these expectations were still somewhat below 4 %. by the way, this uptick is not only confined to germany. for example, according to the new york fed's survey of consumer expectations, in may 2022, us households were expecting an inflation rate of 4. 8 % three years from now. before picking up strongly at the end of 2020, this figure stood at slightly above 3 % for some years. firms in germany likewise made upward revisions to their expectations about average inflation for the next five years. their medium - term average expected rate increased to 4. 7 %. we only started collecting medium - term inflation expectations in january 2022. at that time, firms