consider both fully structural dynamic stochastic general equilibrium ( dsge ) models, semi - structural models, like nigem, and large macroeconometric models estimated to replicate the euro area economy. in the case of the dsge and the macroeconometric model, we set them to reproduce the september ecb mpe projections and then consider counterfactual paths for rates, whereas in that of the nigem we employ its built - in projections. agents in the dsge model have rational expectations. nigem is solved both with rational and adaptive expectations. adaptive expectations require a less aggressive response ( terminal rate 1. 75 % ) as expectations are heavily influenced by the past, characterised by a long period of below - target inflation in the euro area. in particular, the range of the terminal rate estimated with our models is between 1. 75 % and 3 %. see the september ecb survey of monetary analysts. see, for instance, costain, j., g. nuno, and c. thomas, “ the term structure on interest rates in a heterogeneous monetary union ", banco de espana working paper 2223, 2022. longer maturities, causing a tightening in overall financing conditions over and above that implied by our policy rate path. therefore, to achieve the same degree of tightening withour overall policy toolkit, short - term rates would not need to increase by so much. similarly, the run - off of the outstanding tltro - iii operations in the next two years will entail a significant reduction in the size of the eurosystem balance sheet, which may also contribute to the normalisation of our monetary policy stance. in this case, however, markets are probably already expecting this automatic reduction in the size of the balance sheet stemming from tltro - iii. these considerations point to the need to reflect upon the right combination of interest rate increases and quantitative tightening in the coming quarters. conclusion let me conclude. there are a few key takeaways from today ’ s talk that i would like to emphasise. first, euro area inflation has risen mainly due to energy ( and food ) shocks outside of our control. this does not mean that we at the ecb governing council should remain idle. we should continue normalising our monetary policy in order to avoid the emergence of secondround effects and a de - anchoring of inflation expectations. second, our decisions are based on the inflation path over the medium run,

to governor luis maria linde for naming me director general for economics, statistics and research almost two and a half years ago. that was, unquestionably, the necessary step for taking me to where i am today. 3 / 5 thank you, governor, for your constant support over this period. i hope to be up to the task of the legacy you are leaving us. my thanks, too, to the members of the bank ’ s executive commission and governing council and, most particularly, to the deputy governor, javier alonso. javier, your help and far - reaching knowledge of the bank are making these first weeks in the job easier for me. but, above all, i should like to thank my colleagues over the course of the years. it would be impossible to list them all ; many are here today. the career of a banco espana employee can only fully be understood through the prism of the numerous interactions and discussions between us, which are the bedrock on which we build our knowledge and our particular human capital. it is a privilege to be part of this environment and to participate in such an enriching process. finally, the most singular thanks are for my family. without them none of this would have been possible. let me seize this opportunity to refer briefly to what should, in my view, be the two main objectives of the banco de espana at this juncture and which are related to our relevance and reputation. the first has to do with our insertion into the eurosystem and into the single supervisory mechanism. some think this means that the banco de espana has an increasingly diminished role, given that the main functions linked to monetary policy and supervision of the financial system are decided in that framework. however, i believe all of us who have experienced this environment have emerged with a very different lesson learnt. indeed, we cannot overstate the extraordinary potential this setting offers to an institution such as ours which has always valued, and legitimately so, the soundness of its judgement. with that conviction, we should devote most of our efforts to forging closer insertion, collaboration and coordination - based links with our european partners with an essential aim in mind : to reinforce our weight and ability to influence decision - making. this is a challenge and it is also an opportunity, but it is above all a responsibility to support, from the vantage of the banco de espana, the project for european construction. the second objective has to do with our contribution to financial and macroeconomic stability. after an unprecedented