and inflation expectations. and so, the ecb ’ s current baseline scenario is consistent with ending the pepp in march 2022. this does not, however, mean the end of loose monetary policy. based on the current outlook, the ecb ’ s monetary policy intention is to keep rates at their current or lower levels until we see a durable convergence of inflation, also in our forecasts. and this may imply moderate inflation rates above 2 % for some time – although i don ’ t think it would be proportional to use asset purchases to actively strive for such an overshoot. however, the eurosystem ’ s presence in financial markets will remain substantial with the large reinvestments under both the pepp and the asset purchase programme – the app. we will continue to run net asset purchases under the app for as long as necessary. while we are currently thinking about options to ease the transition out of the pepp, incoming data should clarify how the risks surrounding our current inflation the pepp, incoming data should clarify how the risks surrounding our current inflation baseline will play out. now to wrap up. i talked a lot about the uncertainty underlying the inflation outlook. today, on october 14th 2021, i can only make an educated guess what the actual inflation will be one year from now, on october 14th 2022. but even when uncertainty is a part of economics – the part that humbles us – central banks will not let this uncertainty undermine trust. trust in the financial system. trust in the way out of this crisis. trust in our trade. thank you.

projections will close by the end of this year. in figure 2, on the right, we see both the ecb ’ s inflation projections and the marketbased inflation expectations. you can see that both have increased since the beginning of this year, particularly short - term inflation expectations. this means that both the ecb and financial markets expect inflation rates to increase. at least temporarily – due to supply side factors like higher energy prices and supply side bottlenecks. the crucial question is, of course, how transitory these driving factors of inflation are. or how persistent they might turn out to be – thus leading to durably higher inflation. of course, our macroeconomic projections are based on a set of assumptions. they serve as a snapshot in time and are inevitably surrounded by uncertainty. that is precisely why the eurosystem closely and continuously monitors a broad array of inflation indicators – including those from financial markets. this allows for more real - time monitoring, but also helps to assess whether the models fully capture the inflation momentum and persistency. the market view on inflation developments therefore often serves as an important cross - check, both for the baseline scenario and the risks associated with it. currently, market - based inflation measures are close to multi - year peaks, both in the short and medium term. more specifically, the five - year five - year inflation - linked swap rate, an important market proxy for medium - term inflation expectations, hovers around 1. 8 % – the highest it has been since 2017. these market - based inflation measures can be broken down into an inflation expectation component and a risk premium component – which is the extra return investors demand to bear inflation risks. figure 3 shows that both components contribute to the rise in market - based inflation measures. if you look at the area marked in red in the bottom right, you can see that the negative inflation risk premium is vanishing quite rapidly. this means investors are again considering the possibility of higher inflation after a period of low inflation. it also suggests that investors increasingly price - out the risk of deflation. we can translate this to the balance of risks, which is the sum of upside and downside risks to our inflation outlook. for a long time, the balance of risks was tilted to the downside. however, today i will argue that the risks for headline inflation are again tilted to the upside. downside risks largely pertain to the demand effects of the delta variant of covid - 19. upside risks, in