policy horizon, prospects show no big changes with respect to the march report, remaining above 3 %. the expectations implicit in financial asset prices have also risen further, but these increases have been concentrated on the one - year horizon. the inflation expectations of businesses have also increased. both the central bank's survey of price determinants and expectations ( edep ) and the imce indicate that firms expect inflation to be close to 8 % in a year's time. moreover, almost 80 % of the firms surveyed under the may business perceptions report expect inflation to be well above what is considered to be normal over the next twelve months. ( figure 3 ). data for early 2022 show that the economy has already entered an adjustment phase, with a slight decline from the high levels it reached last year. in the first quarter, the seasonally - adjusted gdp series declined 0. 8 % from the previous quarter, with a drop of 0. 2 % in non - mining gdp. in april, the seasonally - adjusted imacec series showed a 0. 3 % drop compared to march ; however, this variation was positive ( 0. 2 % ) for the non - mining imacec. demand has evolved with a marked difference between private consumption and investment, where the former is persistently high. first - quarter data show that private consumption has not lost any significant dynamism and remains above expectations in march, remaining around the highs observed during 2021. consumption of durable goods has undone part of the fall of the end of last year and services consumption has continued to perform strongly, especially in areas such as health care, restaurants & hotels, and transport, reflecting that the economy has been easing restrictions. gross fixed capital formation ( gfcf ), in contrast, has shrunk in its every line, as we anticipated in march. in the first quarter, its seasonally - adjusted series fell by almost 6 % from the previous quarter. the most notable decline was seen in the construction and other works component, although machinery and equipment also fell ( figure 4 ). in the labor market, the demand for work has lost strength. this is reflected in the decline in the online job postings index from its peak of a few months ago, although it is still above its levels of mid - 2019. the background data for the may business perceptions report also points to less dynamic employment in the months ahead, in line with business expectations as reported in the imce. this is consistent with declining

francois villeroy de galhau : monetary and fiscal policy - mix addressing the disease of inflation speech by mr francois villeroy de galhau, governor of the bank of france, at the eurofi financial forum 2023, santiago de compostela, 15 september 2023. * * * ladies and gentlemen, it is a great pleasure to be here for this final day of the traditional september eurofi meeting, and i extend my warmest thanks to didier cahen and david wright for organising this event, this time in the holy city of santiago de compostela. let me start with good news about a favourite eurofi topic : banking regulation and basel 3. i say it as bis chair and former chair of ghos : we had in monday an important ghos meeting in basel, and we unanimously welcomed the decisive progress made this year in the implementation of basel 3. by 2025, all jurisdictions – including europe and – yes – the us – should have implemented it in a broad compliance with the standards. i know each banking industry, on both sides of the atlantic, tends to consider that the other side has undue advantages. it's simply not right, and our motto is now straightforward : let us now close this page, and implement the european compromise, no less and no more. no less as some banks would perhaps still dream of, and no more as some theoreticians of regulation would perhaps imagine. and we should now turn to the priority learned from the banking turmoil : " strengthening supervisory effectiveness " i rather than focusing on further regulation. let me now turn to my theme which is the policy mix to fight our main economic disease : inflation. well, santiago has not yet produced a miracle for inflation, but there is indeed some encouraging news : headline inflation has passed its peak since the beginning of 2023, and it seems that core inflation is following suit. indeed, the latter started to recede, to stand at 5. 3 % in august ( down from 5. 5 % in july and 5. 7 % in march ) in the euro area. obviously, these inflation rates remain too high : we must and we will bring inflation back towards our 2 % target by 2025. i reiterate this morning this clear commitment which is fully consistent with our latest ecb forecasts. monetary policy is the first line of defence, and the main remedy for this disease. i won't make comments about yesterday's governing council and monetary decision