of the wage hikes will be largely reflected in prices over the next few months. this is also reflected on the forecast path that i will share with you in the following minutes. price increases in the services sector remain high, and services inflation is stickier than goods inflation. the annual rate of increase in the b index, which includes both services and core goods, fell from a peak of 77 % to 46. 6 %, while services inflation became sticky at over 55 %. when calculated for the services sector, the diffusion index, which shows the weight of items with increasing prices compared to those with decreasing prices, exceeds the historical average. price increases spread across the sector. time - dependent pricing behavior is more prevalent in the services sector. services items cause inflationary effects to extend over a long period of time due to their pricing behavior. 5 / 11 bis - central bankers'speeches we see that inflation is more persistent in items such as education and health services as well as rents, whose prices change at certain times of the year. the persistence coefficient, which is 0. 6 in core goods, is above 0. 9 in education and rents. in addition to rising house prices and backward - indexation behavior, supply - demand mismatches in the real estate market push rent increases upwards, thus affecting inflation. monthly increases persist in the restaurants and hotels subgroup, which is significantly affected by food, wage and tourism developments. parallel to these developments in the services sector, inflation expectations have also been sticky at high levels for some time now, and are on the rise again in recent months. breaking the persistence in inflation depends on anchoring expectations. during the transition to disinflation, we expect monetary tightening to ensure predictability and balance demand through its cumulative effects. the disinflation process will accelerate with the re - anchoring of inflation expectations. monetary policy distinguished guests, the objective of our monetary policy is to achieve price stability. price stability aims to reduce the volatility of inflation while bringing it down permanently. price stability is a sine qua non for macrofinancial stability. to this end, we initiated a strong monetary tightening process in june. we emphasized that this process would be gradual, balanced and stable. we aim to reduce the underlying trend of inflation and anchor expectations by reinforcing interest rate hikes with quantitative tightening and selective credit tightening. we will continue to use all our tools decisively until inflation falls back to single digits and our medium - term target

markets as many of them are the main exporters of commodities. • fourth and probably most worrisome, in several emerging market countries considerable political tensions have emerged recently, which may have been masked by the economic boom of previous years. we must not forget that the people ’ s trust in their governments is a key prerequisite for a soft landing and maintaining financial sector stability. what policy challenges lie ahead? let me conclude with some policy considerations. at the current stage it is of utmost importance that a further escalation of geopolitical tensions in ukraine can be avoided. a spiral of economic sanctions of increasing severity cannot be in the interest of either russia or the eu or the u. s. a. moreover, it is important to contain political risks in other emerging markets. the delay in the fed ’ s tapering should be used to address external and internal macroeconomic imbalances in the emerging market economies as soon as possible in order to be better prepared for the eventual monetary tightening in the u. s. a. prudent macrofinancial measures are necessary to address potential negative balance sheet effects on domestic borrowers or a stagnation in lending, which could arise in the medium run from the combination of increasing interest rates and relenting gdp growth. finally, it should be noted that global financial stability is a shared responsibility. the fed should therefore clearly communicate the path of its intended policy actions to minimize negative spillovers which could undermine the policy adjustment efforts of emerging markets. altogether i believe that emerging market economies will be able to address these challenges appropriately and that they will emerge from this crisis situation stronger and more resilient! bis central bankers ’ speeches