( ecb ) have raised their policy interest rates by around 2 - 4 percentage points since this spring. these hikes have been made to bring the inflation rates down toward their 2 percent targets, but market participants have expressed concern over whether it is possible to contain inflation and maintain economic growth simultaneously. in fact, some have pointed out that monetary tightening runs the risk of slowing the u. s. and euro area economies by more than expected, while there is also awareness that insufficient tightening carries the risk of keeping inflation elevated. even in the latter case, significant tightening will eventually be needed, which will end up putting greater downward pressure on these economies. it is necessary to carefully monitor the impact of such developments on global financial markets ; for example, adjustments in asset prices and capital outflows from emerging economies. other risks surrounding overseas economies include developments in prices of commodities, including grains. international commodity prices have declined recently, in reflection of concern over a slowdown in the global economy, but they may turn to an increase again depending on factors such as developments in the situation surrounding ukraine. moreover, vigilance against the course of covid - 19 at home and abroad is still warranted. although the seventh wave of covid - 19 this summer ended up having a limited impact, constraints on economic activity may intensify again depending on the course of covid - 19 in japan. according to the imf's october weo that i referred to earlier, japan is projected to have the highest growth rate among the group of seven ( g7 ) economies next year ( chart 6 ). there are two factors that underlie the projections, where japan's economy will continue to recover while overseas economies will slow. the first is the difference in the timing of the resumption of economic activity. in japan, as a result of prolonged vigilance against covid - 19 compared with overseas economies, pent - up demand, such as for dining - out and travel, will start to materialize clearly going forward ( chart 7 ). the government's domestic travel discount program was launched last month to support such materialization. the further relaxation of international border controls, also initiated last month, is expected to bring back inbound tourism demand. moreover, the comprehensive economic measures recently formulated by the government will contribute to economic growth. the second factor is that highly accommodative financial conditions have been maintained in japan through continued monetary easing, while monetary policy has been tightened at rapid paces

yannis stournaras : normalising monetary policy in the euro area talking points by mr yannis stournaras, governor of the bank of greece, at the eurofi high level seminar 2022, paris, 28 february 2022. * * * what we observe today is mostly supply - side inflation. in fact, the acceleration of inflation mainly reflects two interrelated supply - side shocks : one comes from the pandemic. actually, we had a series of pandemic shocks, then we had an energy shock, and finally we have the invasion of russia in ukraine, which, regarding its economic implications, is also a supply - side shock. in the short term, its implications are stagflationary, but, in the medium term, the implications are deflationary, depending of course on the resolution of the uncertainty. we do not know much about the resolution of the ukrainian crisis at this moment, so we have to be cautious. in light of these supply - side bottlenecks and shocks that we observe and our supportive monetary and fiscal policies, we have witnessed an excess of demand over supply. this has taken place not only in the euro area but also in much of the world, including the us, which has undertaken a much larger fiscal stimulus than we actually have. the excess demand has pushed up the prices of energy products, including oil and natural gas. natural gas prices have also been affected very much by the invasion of russia in ukraine and are likely to increase even more in the future. this is why the above - mentioned supply - side shocks have been interrelated. it is not a coincidence that the oil price shock has occurred at precisely the same time as the covid shock. of course, as we are approaching the end of the pandemic, the supply disruptions will diminish – a process that has already started. combined with the gradual elimination of excess demand, the energy shock is likely to subside. however, the ukrainian crisis and its resolution is likely to delay this. in light of this situation, the ecb ’ s projections and the forecasts of all the major financial institutions, of which i am aware of, show that consumer price inflation will converge to 2 % in the next two years. also, forward measures of inflation, such as the 5 year - 5year inflation swap rate, as well as the euro area ten - year benchmark bond yield, are consistent with our 2 % medium - term