objective. finally, it is vitally important that the ecb is always attentive to the full risk distribution of possible outcomes, rather than focusing only on the baseline assessment. in our latest monetary policy meeting, we assessed that, in the near term, supply bottlenecks and rising energy prices are the main risks to the pace of recovery and the outlook for inflation. if supply shortages and higher energy prices last longer, these could slow down the recovery. at the same time, if persistent bottlenecks feed through into higher than anticipated wage rises or the economy returns more quickly to full capacity, price pressures could become stronger. however, economic activity could outperform our expectations if consumers become more confident and save less than currently expected. we will continuously reassess these risk factors, in line with incoming data flows. 1 by pushing down the current price level compared with the future price level, a temporary vat cut can be an effective stimulus measure during a downturn as it encourages a shift in consumption towards the present. the data suggest that the german vat cut was effective in raising consumption : see bachmann, r., born, b., goldfayn, o., kocharkov, g., luetticke, r. and weber, m. ( 2021 ), “ a temporary vat cut as unconventional fiscal policy ”, discussion paper series, no. 16690, centre for economic policy research, london. 2 under a different scenario, if energy prices rise due to hikes in carbon taxes, there is no decline in the terms of trade and aggregate demand can be protected through the recycling of carbon tax revenues. 3 our two percent target is expressed in relation to the hicp. while our strategy recognises that the inclusion of the costs related to owner - occupied housing in the hicp would better represent the inflation rate that is relevant for households, the full inclusion of owner - occupied housing in the hicp is a multi - year project. in the meantime, the governing council in its monetary policy assessments will take into account inflation measures that include initial estimates of the cost of owner - occupied housing in its wider set of supplementary inflation indicators. however, in terms of the two percent inflation target, clarity requires that this is guided by the prevailing hicp measure, which is produced by eurostat on a timely, comprehensive basis with the application of the highest statistical standards. 3 / 4 bis central bankers'speeches 4 / 4 bis central bankers'speeches

%. it has occasionally risen above the 2 % ceiling as a result of temporary disturbances, such as the recent hike in oil prices. however, when such shocks occur, it is important for us to ensure that price stability is maintained over the medium term. in this regard, it is worth mentioning that inflation expectations over the next 10 years ( as measured in particular by consensus economics ) have never exceeded 2 % since the introduction of the euro, i. e. exactly at the level consistent with a definition of price stability – “ below but close to 2 % ”. during the last seven years, monetary policy in the euro area has been successful in maintaining stable prices, thereby making the best possible contribution it can make to sustained output growth. along the way, stability - oriented policies have also directly improved the well - being of households, inter alia, by supporting the purchasing power of their income and savings. nominal and real interest rates have remained at low levels ever since the euro was introduced and are expected to stay at historically low levels over a long period of time. looking back in time, it is interesting to note that, all along the yield curve, market interest rates in euro area countries became aligned with the lowest – instead of the average – rates prevailing prior to the euro. this low level of interest rates is of course supportive of the economic recovery in the euro area, while at the same time being consistent with price stability over the medium term. moreover, interest rates have over time reflected a high degree of “ consonance ” between the european central bank ’ s policy intentions and the market views concerning the course of policy. such a level of predictability of policy, which signals a high degree of transparency, is particularly rewarding, considering that a significant part of our job is devoted to explaining and discussing our actions and our goals to the public. transparency is a precondition for accountability and improves communication with the public regarding how the european central bank conducts monetary policy, thereby fostering predictability and making policy much more effective. in this regard, allow me to stress that the european central bank was the first major central bank to introduce a real - time press conference displaying in detail the diagnosis and the monetary policy decisions of the governing council. another important result of monetary unification is the increase in european financial integration. a large, liquid and integrated money market was created after 1 january 1999. the euro bond market quickly turned into the second largest bond market in the world. within the euro area, the