clear to me that we still have some way to go on our course of monetary policy tightening. we need to continue until our engine has cooled down not just on the surface, but also at its core. 6 closing remarks ladies and gentlemen, i began my speech by pointing out that both dekra and the bundesbank are meticulous and passionate about performing checks. i am aware that our analyses are not always quite as precise as vehicle inspection reports. i hope, however, that i have been able to give you some insight into the bundesbank's checking process. dekra's motto is on the safe side. unfortunately, we are not entirely on the safe side yet when it comes to stable prices. inflation is still far too high. however, i am confident that, through decisive monetary policy action, we will overcome the high levels of inflation. now that we have successfully completed our major macroeconomic inspection, i look forward to joining you in dialogue. thank you. 1 see deutsche bundesbank ( 2023a ), arduous recovery amid high and only gradually easing inflation – outlook for the german economy up to 2025, monthly report, june 2023. 2 for a detailed analysis for germany, see deutsche bundesbank ( 2023b ), developments in bank interest rates in germany during the period of monetary policy tightening, monthly report, june 2023. 3 see deutsche bundesbank ( 2023a, 2023b ), monthly report, june 2023. 6 / 7 bis - central bankers'speeches 4 lagarde, c., breaking the persistence of inflation, speech of 27 june 2023. 7 / 7 bis - central bankers'speeches

yet again the ongoing pressure on monetary policymakers to take action. moreover, inflation could be fuelled further if corporate profits and wages increase more strongly than expected. to sum up : the surface of our engine isn't quite as hot as it used to be. but at its core, it is still overheated and needs to be cooled down further. 4 orderly transmission of monetary policy so far, i have explained how we expect the economy and inflation to develop. in addition, we are also analysing how financing conditions in the euro area are changing. the financial sector plays an important role in the process of monetary policy transmission. when economists talk about " transmission ", we are referring to how the effects of monetary policy measures pass through to the economy and prices, for example via financing conditions. interestingly, this is another thing that cars and monetary policy have in common – they both need a good transmission. an economy is a complex entity. for this reason, monetary policy is transmitted through a wide variety of channels, including one that we call the " interest rate channel ". through this channel, our interest rate increases impact the costs of borrowing. this makes it more expensive for households and enterprises to take out loans. as a result, their demand for loans falls. this dampens the demand for capital and consumer goods at first and then, over the medium term, inflation as well. according to our analyses, lending rates have developed broadly as we would have expected given the economic environment and the changes in key interest rates. 2 4 / 7 bis - central bankers'speeches from a macroeconomic perspective, the higher lending rates and the resultant weakening of lending growth are thus no cause for concern. on the contrary, these are signs that the transmission process is working. another channel for the transmission of monetary policy is the lending behaviour among banks. recently, there were concerns that banks might excessively restrict access to loans following the turmoil in the financial markets during the spring. in economic jargon, these would be referred to as " credit supply restrictions ". too many of these would cause a " credit crunch ", which would slam the brakes on the economy. banks in the euro area have, in fact, gradually tightened their lending conditions over the past few quarters. they justified this tightening mainly on the basis of higher credit risk among borrowers and the bleaker economic environment. although tighter lending conditions may sound problematic at first, this is also an important channel through which tighter monetary policy can take effect