have led to significantly improved bank lending and reduced the fall in euro area gdp in 2020 without compromising the solvency level of the banking system. 1 the imbalance between cyclical and structural buffers has gained more attention in the macroprudential debate since the beginning of the pandemic. there seems to be a growing consensus on the need to reassess the current balance between structural and cyclical buffers and to create more macroprudential space that could be used in a system - wide crisis if needed. i strongly welcome this development and encourage further work and discussions on this important topic, including on specific ways to create macroprudential space. while it would be premature to envisage a certain outcome at this point, i would like to suggest three guiding principles for further deliberations on this topic. first, the creation of macroprudential space should be capital - neutral. in other words, it should be achieved by amending or rebalancing certain existing buffer requirements rather than by creating additional buffer requirements for banks. second, the additional macroprudential space created in this way needs to have strong governance in order to ensure that capital buffers are released in a consistent and predictable way across countries when facing severe, system - wide economic stress. third, considerations to create macroprudential space should focus on options that ensure continued compliance with applicable international standards set by the basel committee. the capital conservation buffer would be a natural candidate for creating macroprudential space if it was made releasable in a context where these principles were adhered to. specifically, the possible release of the capital conservation buffer in a system - wide crisis should be centrally governed in the euro area and could be combined with dividend restrictions in order to maintain equivalence with international standards. complementarities between macroprudential and monetary policy the second challenge relates to complementarities between macroprudential and monetary policy. as widely recognised in the literature, policy outcomes can be improved if complementarities between these two policy areas are exploited. 2 for instance, during phases of risk build - up, effective macroprudential policy can unburden monetary policy with respect to financial stability concerns. an advantage of macroprudential instruments in this respect, and which is particularly relevant in a monetary union, lies in the possibility to target the use of instruments towards certain sectors and to address asynchronous business and financial cycles across member states. similarly, during phases

percent for 2022, by 2 percentage points to 5, 5 percent for 2023 and by 0, 2 percentage points to 2, 3 percent for 2024. energy price inflation remained extremely elevated, ( at 38. 3 per cent ), and it continues 1 / 4 bis - central bankers'speeches to be the dominant component of overall inflation. market - based indicators suggest that, in the near term, oil prices are likely to moderate, while wholesale gas prices will stay extraordinarily high. the relatively high import share of gas needed for the eu27 energy consumption, will create extensive challenges in the coming winter months, especially, in countries with gas - intensive industrial sectors. food price inflation also rose in august, ( to 10. 6 per cent ), reflecting higher input costs related to energy, disruptions of trade in food commodities, and adverse weather conditions. while supply bottlenecks have been easing, these continue to gradually feed through to consumer prices and are putting further upward pressure on inflation, as is recovering demand in the services sector. the depreciation of the euro has also contributed to the rising inflationary pressures, together with the aforementioned supply and demand factors. governing council latest meeting decision in response to these developments, in our latest meeting, the governing council of the ecb decided to raise the three key ecb interest rates by 75 basis points. this significant step frontloads the transition from the prevailing accommodative level of policy rates towards levels that will enable the timely return of inflation to our two per cent medium - term target. undeniably, the key current challenge for the ecb as well as other major central banks is raising interest rates to deal with inflation while recession risk is high. however, the risk of high inflation becoming entrenched in inflation expectations is a greater threat. the longer inflation remains elevated, the more harm it will cause to individuals and companies. while monetary policy will act decisively to restore inflation to our target, fiscal policy must be targeted in order not to counteract monetary policy and safeguard the most vulnerable people's incomes. domestic economic developments let me now turn to domestic economic developments. the cyprus economy, continued to record noteworthy gdp growth, despite the outbreak of the war. real gdp growth in cyprus expanded by about 6 percent during the first half of 2022, mainly driven by a faster than expected recovery in tourism - related activities and, to a lesser extent, by growth in information and communication activities and in professional services