##mic and employment has almost returned to the pre - pandemic levels. nonetheless, wage demands, and realized wage agreements continue to be relatively modest. but if inflationary pressures were to persist longer, while the recovery matures and the labor markets conditions become tighter, higher wage increases will become more likely. if i weigh these three factors, i first note that the inflation outlook is one characterized by elevated uncertainty. nonetheless, my current assessment is that transitory factors still dominate the inflation picture. the longer these transitory factors persist, however, the higher the probability that elevated inflation eventually feeds into higher wages. that is why our assessment of future wage developments will be very important in the period to come. focusing on policy implications, the recent increase in inflationary pressures does not mean that we have already achieved our goal of inflation converging durably to our 2 % target. nor does it mean that our accommodative monetary policy is about to come to an end. in fact, our interest rate forward guidance is clear about this : we will only start raising our key policy rates once we are confident that inflation has durably converged to our target, also in our projections. this is a condition that is very unlikely to be fulfilled already in 2022. 1 / 2 bis central bankers'speeches although in the current outlook inflation has not yet durably converged to our 2 % target, we should not be complacent about upside risks to inflation. we therefore need to maintain a degree of policy optionality. or in other words, we cannot make long - lasting unconditional commitments that might end up being incompatible with how the inflation outlook develops. this need for policy optionality has implications for the transition out of the pandemic emergency purchase program, the pepp, which is likely to come to an end in march 2022. here, we face two challenges related to the pepp ’ s dual purpose. first, there ’ s the pepp ’ s monetary stance role. the program was designed in part to counter the downward impact of the pandemic on inflation. with the pre - pandemic inflation outlook restored, and with upside inflation risks being prominent, this goal has been reached. a key question going forward is whether we will need a higher purchase volume under our regular asset purchase program to facilitate the transition out of the pepp and to further support inflation dynamics. to me, this is not clear - cut. while we will definitely

fout! onbekende naam voor documenteigenschap. practices that we have found and we hope that it will help other supervisors to implement these best practices and hence — via the leverage that membership has — it will have an effect on banks and insurance undertakings all around the world. secondly, this work is spearheaded by the bank of england, the ngfs focuses on climate - related stress testing, developing reference climate policy scenarios for central banks and supervisors and giving guidance for central banks and supervisors on how to integrate climate risk analyses into macroeconomic and financial stability surveillance, seizing the macro financial impact of these risks. as climate - related risks are nonlinear, will to a large extend manifest themselves in the future and can therefore not be based on historical data, we need to develop forward looking risk management techniques. the third piece focuses on data gaps and disclosures. wrapping up, in the run up to cop26, i really want to applaud the cop26 for making the very explicit connection with the financial sector, given the crucial importance of managing financial risks. i want to offer that the ngfs stands ready to do all we can to contribute. second, i want to point out the great importance of any financial institution which is not already doing so, to incorporate in the dna of their financial risk management, the physical and transition risks related to climate change, and even broader to environmental change, biodiversity change, sdg - related change. any financial institution should make sure it has this long - term view and incorporate it into risk management. coming back to the pandemic. people are dying because of the pandemic. the planet is perishing because of unwise policies from us, the people. there is a public health crisis, but there is also a planet health crisis. the planet also needs intensive care. this is the time to apply the lessons drawn from our past mistakes. this is the time to turn the page, this is the time to invest once and for all in a truly sustainable economy. in these dark days of the pandemic, we must create an avenue of hope, we must switch on the light. let that light be green.