the year. of course, we at the bundesbank are keeping a close eye on monetary developments in the us, given the process of policy normalisation. here, also given the substantial fiscal stimulus, inflationary pressures are finally building up. for now, market participants are expecting the fed to continue the process of gradually normalising policy. at the same time, fed watchers are noting the new fed chair ’ s language that “ headwinds are shifting to tailwinds ”. this is also what lael brainard, member of the board of governors of the federal reserve system, said at this place just three weeks ago. 4 remarks on free trade to some extent, the economic outlook for the us and the euro area, and thus its monetary policy, will be influenced by trade policy. on the one hand, investors await the outcome of the brexit negotiations. on the other, investors are uncertain about what the future holds for the “ bilateral dealmaking ” approach to us trade policy and its interplay with international trade partners. during the post crises economic expansion, wto members have imposed over 2, 000 new trade barriers. this rise in protectionism and the growth in trade restrictions – new walls – are in our view downside risks to the growth outlook. and the markets agree with that judgement, as the market responses to the us tariffs have shown. the bundesbank is convinced that open markets are important for a dynamic global economy. at 3 / 5 bis central bankers'speeches the g20 meeting in buenos aires last week, the new german minister of finance, olaf scholz, also underlined the importance of open markets. openness in trade delivers many benefits : we have larger markets and can therefore better exploit economies of scope and scale. a greater division of labour creates more opportunities for specialisation. technology and innovation diffuse across borders more quickly. and fiercer competitive pressure can drive up productivity. free trade is almost always a boon for a country ’ s entire economy. but not everyone will necessarily derive personal benefits from open markets. after what we have experienced, we need a serious debate about the positive and negative impact, and especially the redistributive effects which global cooperation is having on our societies. but new walls and protectionism cannot be the answer. instead, we need to focus on making global growth even more inclusive. william c dudley, president and chief executive officer of the federal reserve bank of new york, recently delivered a speech entitled : “ making

typical for open democratic societies to go from one political controversy to the next. there is no need to badmouth democratic discourse as chaos. recent events in germany are a good example. there, it has taken quite a while to form of a coalition – longer than ever before in post - war german history, in fact. however, the government remained functional at all times. and even more importantly, an anti - european course was never on the cards, no matter what coalition was formed. this also explains the market response : one might think that the situation in germany would be perceived as a threat to the economy and that it would therefore send the dax lower. but the opposite was the case : unlike the reaction to france ’ s presidential elections in 2017, the market responses to the recent elections in germany and italy appeared more benign. this also goes for catalonia. we see this as a good sign. in the bundesbank ’ s view, market participants are acknowledging that economic stability is returning to much of the euro area and that eurosceptic 1 / 5 bis central bankers'speeches tendencies will be manageable. so you see : current european political processes do not have an overwhelming impact on economic developments, and the markets have learned to differentiate between actual crises and political controversies. however, now that a new german government has been formed, the reform process in the euro area does need to gain speed. in mid - march, on the very day the new federal cabinet took office, the new german foreign minister heiko maas immediately travelled to paris to “ seize macron ’ s outstretched hand ”, as he said. angela merkel also promptly travelled to paris following her reelection in the bundestag. france and germany have traditionally been key players in the process of reforming european economic and monetary union. we see a clear desire on both sides, in france and in germany, to foster reforms. merkel and macron have announced a joint roadmap for reforming the euro area, which they intend to present to their european peers in june. however, negotiations will undoubtedly be long and arduous, especially when it comes to minimising risk – which is what the bundesbank is suggesting – or sharing risk, which is what some other ideas imply. all the reform plans touch upon a key question for europe : what shape should the eu ’ s political system take? to what extent do we see the eu as an international, intergovernmental institution, to what extent is it a regime