reason that wolfgang schauble, germany ’ s finance minister, also recently reiterated just how important it is for the european commission to “ strike the right balance between its political function and its role as guardian of the treaties ". realigning action and liability is not an end in itself. it is about creating the right incentives to encourage member states to do all they can to bring about sustainable growth and employment. ultimately, this also strengthens identification with the european project, as the german council of economic experts recently pointed out. 7 / 8 bis central bankers'speeches 4. conclusion ladies and gentlemen, it is important to “ focus all efforts on preventing inflation, ” as ludwig erhard wrote in his book “ wohlstand fur alle ” in 1957. it is in line with this principle that the bundesbank has done its utmost to ensure price stability over the last 60 years. if necessary, it is not afraid to ruffle a few feathers if it sees risks to stability. this has not damaged our reputation among the general public, as proven not only by surveys, but also by the widespread support for us on occasions such as our recent open day in frankfurt, for example. on our anniversary, federal president frank - walter steinmeier, too, attested to the public ’ s deep - seated confidence in the bundesbank – and not just in the area of monetary policy, but in our other key tasks as well. we will continue working to justify this confidence. of that you can be sure. 8 / 8 bis central bankers'speeches

the first is our assessment of the inflation outlook in light of the incoming economic and financial data. this assessment will be informed primarily by our staff macroeconomic projections, on which all data are incorporated in a coherent manner. in this regard, the staff march forecast pointed to a weakening of activity in 2023, with real euro area gdp expected to grow by 1 % in 2023 ( compared with 3. 6 % in 2022 ). this scenario is somewhat more optimistic than that of the previous projections ( published in december ), reflecting better than expected recent economic data and the fall in the cost of energy, so that real income losses are lower. growth is expected to pick up, to 1. 6 %, see “ an overview of the ecb ’ s monetary policy strategy ”. in both 2024 and 2025, based on a robust labour market, improving confidence and the recovery of purchasing power. however, these growth rates are lower than projected in december owing to a stronger tightening of financial conditions, including a larger appreciation of the euro exchange rate. and, in any case, the accumulated growth path expected now for 2022 - 2024 is significantly lower – around 2. 5 % lower – than that projected in december 2021, before the war in ukraine, reflecting the material deterioration of euro area terms of trade. on inflation, the baseline scenario is one of gradual convergence of inflation to our 2 % target. after peaking at 10. 6 % in october last year, hicp declined to 6. 9 % in march this year, according to the flash estimate, on the back of lower energy prices and base effects. by contrast, food price inflation and underlying inflation ( excluding energy and food ) have continued to rise, surprising on the upside and posting high rates in march ( of 15. 4 % and 5. 7 %, respectively ). headline inflation is expected to remain high for the rest of 2023, albeit on a downward path that will take it to 2. 8 % in the last quarter of the year. this drop in inflation is mainly explained by the energy component, while underlying inflation is expected to remain elevated. specifically, the ecb projections point to inflation averaging 5. 3 % in 2023, before decreasing to 2. 9 % in 2024 and to 2. 1 % in 2025. this downward trend would be underpinned by the gradual disappearance of upward pressures from the reopening of the economy, previous supply - side shocks ( supply bottlenecks and