years, higher wages have been partly offset by squeezing corporate margins, particularly in market services. another factor may be the possibility of a downward drift in long - term price expectations that could have followed from the prolonged period of low inflation. last, but not least, structural changes may have impacted the process of price and wage formation, in the context of increased digitalisation and globalisation of our economies, and diminishing bargaining power of workers. still, the quantitative weight of these structural factors is less than clear and has not achieved consensus among economists. i. b. the future : the return of inflation? the current debate on a potential return of inflation may be legitimate in the us ii, but not in the euro area. in the us, the ongoing recovery is much faster than what was observed after previous crises and the output gap is projected to close and become positive in the course of 2021. the inflation surge could nevertheless be transient, and then hopefully stabilise in a new regime of “ controlled reflation ”. the jump in euro area headline inflation in early 2021 did come as a surprise ( it rose from - 0. 3 % to + 1. 3 % ) ; nonetheless, the causes of this increase are temporary in nature, like the recent rebound in oil prices, the reversal of the vat rate cut in germany and from modified weights in the hicp basket. over the medium term, the persistence of substantial economic slack over the projection horizon, despite a significant page 5 sur 9 recovery from the second half of this year, will weigh on inflation. all in all, the march 2021 ecb projections show that headline inflation would remain weak, at 1. 4 % in 2023. inflation is therefore not yet where we would like it to be, back towards 2 % over the medium term. our inflation objective must be understood as simple, symmetric and medium - term oriented. iii “ simple ” means that we could reexamine oversophisticated qualifiers still associated with the 2 % figure. “ symmetric ” refers to the fact that our objective is a target and not a ceiling : we might be ready to accept inflation higher than 2 % for some time. finally “ medium term ” means that we assess inflation performance over a long enough period, looking forward, but also not ignoring the past. keeping this inflation objective in mind, allow me to reflect on our current and future monetary policy, and design a reinforcing “ equilibrium triangle ” : the first corner of this triangle is

- linear forward guidance, mentioning explicitly our tolerance for inflation overshooting, with reference to past inflation shortfalls. it is the combination of these three levers that should be used as the foundations of the “ equilibrium triangle ” of our monetary policy in this next phase of the covid crisis. ii. wider expectations are emerging let us return to the question of broadening public expectations of central banks. central banks are facing the risk of being considered not only the only game in town, but also the all - purpose game. that said, the reality of climate change, rising inequality – which i will touch briefly – and risks to financial stability – which you invited me to focus on – are all elements to be taken into account, and as such are parts of the ecb ’ s strategic review, more than the fed ’ s one. ii. a. climate change considering climate change is neither a mission creep, nor a mere militant conviction or a fad. it is an imperative : climate change does affect our ability to achieve price stability, our primary objective. on one side, extreme physical risk or more gradual transition risks will, and do already, affect supply. on the other side, the implementation of policies to mitigate climate change such as carbon taxes, emission targets or border adjustment tariffs will also affect input and consumer prices. for example the recent jump in headline inflation in the euro area illustrates these two points. part of the recent increase in energy prices was linked to higher electricity prices in spain due to unusually cold weather and the introduction of a carbon surcharge on prices of liquid fuels and gas in germany. in my view, there are three measures we central bankers can take. vi the first is to incorporate climate change into our macroeconomic models. second, we must gradually decarbonise our balance sheets in a pragmatic and targeted way by adapting the valuation of our assets. third, by disclosing the criteria by which we value assets, we can set a standard that others will follow. and market neutrality – which should take into account the mispricing of climate risks – should not put a brake on carbon neutrality. ii. b. inequalities page 7 sur 9 monetary policy inevitably has redistributive effects. it transfers revenue between lenders and borrowers, and affects asset prices and hence wealth. the evidence is preliminary but it suggests that the effects of more accommodative monetary policy has reduced income inequality by boosting revenues thanks to