already expected to settle at a considerably lower level, falling to around 3. 5 per cent, before returning to around 2 per cent in 2024. these projections are subject to a high degree of uncertainty, as the most recent developments also suggest. indeed, in the last two quarters, the forecasting errors made by the ecb and by the eurosystem ’ s staff were much higher than in the past. our analyses indicate that the direct effects of the forecasting errors relating to energy prices – which are the main exogenous variables, whose changes are inferred from the prices of futures contracts – explain over 60 per cent of the overall error made in forecasting inflation ; the share rises to 80 per cent when indirect effects are also taken into account ( e. g. those on sectors such as transport ). these results confirm the validity of the models used, though they draw our attention to the quality of the forecasts employed as inputs, which include, among others, in addition to energy prices, developments in world trade. there has undoubtedly been a general underestimation of the effects that the excess demand in the united states, particularly in the durable consumer goods sector, would have on the rest of the world via energy prices and, together with the impact of the measures adopted to counter the pandemic, via supply chain bottlenecks. even more significant, however, has been the underestimation of the geopolitical tensions, with the sharp drops in gas supplies from russia – observed as early as the beginning of last year – attributed first ( and probably mistakenly ) to the cold winter in that country and then to pressures by the russian government in connection with the nord stream 2 pipeline. but the most important factor has, of course, been the outbreak of the war : while the prices of futures had continued to predict descending oil and gas prices up to the end of last year, the conflict has left not only current but also expected prices at very high levels. the repercussions of rising energy prices for inflation, which were therefore to be considered as temporary owing to the widespread expectations of base effects soon turning negative, instead became more persistent. the risks of a de - anchoring of inflation expectations and of a price - wage spiral the worsening of the terms of trade and the loss of purchasing power caused by rising energy prices will tend to hold down final demand in the euro area, moderating the pressure on prices. however, the risk that long - term

on f & p standards. i thank you all for your engagement with the review and support for the f & p framework, given it is one of the key tools we have for ensuring continued trust and resilience in our sector. progress, don't regress so let me return to the topic of financial services and the economy, in particular in the face of a period of structural economic challenge and change. i think the importance of financial services for the economy is clear. but if trust is the true currency of this system, and resilience is essential to providing financial services through the cycle, then i hope it is equally clear that it is in both the economy's and the sector's interest that is well - run and well - regulated. this i believe has been the consensus of the post crisis years. and, for me, the evidence of success is in how the financial sector has managed the inflation shock, the pandemic itself and the impact of russia's war in ukraine. as we look towards the challenges ahead, however, it appears to me that the consensus is at risk of slipping. and rather than progressing by securing stable growth, we risk regressing into the mistakes of the past. you won't be surprised to hear from me that if a trustworthy and resilient financial sector is in all our interests, then calling for lighter regulation or for lower standards or indeed howling at the moon of no regulation at all is in no - ones'interests. i recognise the importance of competiveness. in fact i believe it is imperative we in europe focus on improving productivity in order to deliver better living standards for our citizens. tackling productivity problems, delivering more innovative companies in europe, and financing the digital and green transitions, are all important challenges we need to address. 4 / 7 bis - central bankers'speeches but i humbly suggest that financial de - regulation is not the answer. the nyberg report, the honohan report, the banking inquiry are not historic documents but rather the story of our very recent past. a story echoing similar stories in many other jurisdictions, such as the financial crisis inquiry commission in the us, and of course the larosiere report in europe. driving growth through'lighter touch'financial regulation failed. rather than delivering better growth it led to one of the most growth destructive events of the last century. not to mention the human costs at the time and in the aftermath ; as well as the long