is around 30 % and, to inflation, roughly 20 %. thus, the major part of the impact on inflation is still in the pipeline. nevertheless, inflation in the euro area has receded somewhat over the past few months. but the battle for price stability has not yet been won : in march, the euro area consumer price index rose by 6. 9 %. the recent decline is mainly attributable to lower energy prices and a favourable base effect, which can be explained as follows. energy prices rose sharply in march 2022 as a result of the russian invasion of ukraine. this has so far been reflected in a significantly higher year - on - year inflation rate. by contrast, since march, the higher price level has formed the basis for calculating the inflation rate. and this is reflected in a lower headline rate. according to the latest ecb staff projections, inflation is expected to continue to decrease, but gradually. this also takes into account that the effects of the monetary policy measures have not yet unfolded fully. for this year, the experts forecast inflation to average 5. 3 %. in 2024, they expect 2. 9 % ; and only in the second half of 2025 is inflation projected to return to 2 %. two percent is our medium - term inflation target. the hicp rate excluding energy and food is projected to remain above 2 % until the end of 2025. as a caveat, the projection exercise was finalised before the recent market turmoil. but the latest world economic outlook, released just this week, forecasts the same inflation figures for 2023 and 2024. nevertheless, i believe that risks to price stability are currently tilted to the upside. on that note, it is not a given that we will return to price stability over the medium term. 4 the case for higher rates – and concerns therefore, i do not think that our job is already – or even mostly – done. rather, in my opinion, further interest rate hikes will be required. other critics warn that a further tightening would harm the economy or place too much strain on financial markets. both arguments need to be taken seriously. yet i find neither of them convincing. 4. 1 economic concerns as regards the economy, monetary tightening has so far caused no serious harm in the euro area. 3 / 7 bis - central bankers'speeches of course, it is undeniable that restoring price stability will require aggregate supply and demand to be aligned. and indeed, monetary tightening has been

risk of above - target inflation for too long so if the baseline of our projection prevails, " we have a lot more ground to cover, " 2 as christine lagarde rightly said. in other words : unless the inflation outlook improves significantly, expect us to raise interest rates further. 5 / 7 bis - central bankers'speeches we are not pre - committed to future rate hikes, but we are committed to delivering price stability. thus, it is certainly far too early to stop raising rates or even think about lowering them. to get inflation under control, we need to reach a sufficiently high and restrictive interest rate level. and we need to maintain that level for a sufficient period of time until the data and projections provide us with sufficient evidence that inflation is returning to our medium - term target of 2 %. and this must also be reflected in underlying inflation. otherwise, high inflation may become entrenched and inflation expectations might become unanchored. the longer the inflation shock persists, the higher the risk that this experience will leave scars in people's memories. in a speech i gave last year, i discussed such scarring effects in a little more detail. 3 i pointed to recent studies which find evidence of this. for the united states, for example, a study has shown that people over the age of 60 have had higher inflation expectations over the past decade than younger people. 4 they had obviously experienced the high inflation rates in the 1970s and early 80s. which has left its mark. my teenage children and their peers are currently experiencing high inflation for the first time in their life. the longer we have to live with inflation rates far above target, the greater the mark that this will leave. and this is not just a matter of memory. it has an impact on economic behaviour. it may influence their expectations and decisions long after inflation has gone back down. high inflation is currently giving us central bankers a great deal of public attention. my colleagues and i would really enjoy it if inflation were so low that people would pay less attention to it. if inflation is sufficiently low, it is rational for consumers to be relatively inattentive to it. fed chairman powell described such rational inattention in his speech at the latest jackson hole symposium as follows : " when inflation is persistently high, households and businesses must pay close attention and incorporate inflation into their economic decisions. when inflation is low and stable, they are freer to focus their attention elsewhere. " 5 a recent study