by banks to help distressed borrowers settle their obligations. in addition, thanks to the solid solvency buffers and the support of the central bank of cyprus that relaxed temporally the capital and loan origination requirements, the banking system has supported the domestic economy by providing fresh lines of credit from january 2020 to june 2022 of 8, 1 billion euros. 2, 6b euros have been granted to households for mortgages, whilst 1, 6 billions and 0, 6 billions have been granted to the wholesale and hotel industries which have been affected severely by the pandemic. nevertheless, all the banks need to remain cautious, prudent and active in order to confront a challenging period that lies ahead us. whilst the first round effects from the geopolitical crisis has been up until now manageable, the second round effects have 5 / 6 bis - central bankers'speeches not yet materialised and uncertainty in an environment with high inflation and weakened growth prospects is elevated. adverse macroeconomic developments may deteriorate banks'profitability and asset quality, causing delinquencies and an upward trend in impairments and provisions. interest rate normalisation policies may support the banks'revenue capacity through higher yields. however, they might fall short to balance out the structural deficiencies that would be magnified if the economic prospects follow an adverse route. it is therefore of pivotal importance for banks to adapt their business strategies to the new realities forged by the consecutive crises. and this would not be an easy ride as challenges emerge, often in unpredictable ways. i will today refer to two which i consider to be amongst the most important ones. the first one relates to business model and structural weaknesses. despite the low profitability being a wider structural european issue, the cost to income ratio of the cyprus banking sector, which amounts to 76 percent as at june 2022 is significantly higher than the respective eu average of 63 percent, signalling serious cost inefficiencies relative to peers. investment in technology is key in the efforts to unlock efficiency and bridge this gap by addressing chronic issues that dent profitability such as cost inefficiencies, limited avenues of income generation, competitive pressure from entities operating outside the traditional banking spectrum and changing customer demands and needs. the second one relates to the risks of climate change. the ongoing effort to reduce the dependence from russian energy may increase the transition risks and as such banks shall enhance and adapt their climate risk mitigation strategies. the fact that some of the banks have started making

percent, 2, 9 percent and 1, 6 percent respectively. harmonized inflation rose to a high of 9. 1 percent in august, up from 8. 9 percent in july. for the period january - august as a whole, inflation stood at 7, 6 1 / 6 bis - central bankers'speeches percent. compared with the june 2022 eurosystem staff broad macroeconomic projection exercise, headline inflation has been substantially revised up in september by 1, 3 percentage points to 8, 1 percent for 2022, by 2 percentage points to 5, 5 percent for 2023 and by 0, 2 percentage points to 2, 3 percent for 2024. energy price inflation remained extremely elevated, at 38. 3 per cent, and it was again the dominant component of overall inflation. market - based indicators suggest that, in the near term, oil prices are likely to moderate, while wholesale gas prices will stay extraordinarily high. the relatively high import share of gas needed for the eu27 energy consumption will create extensive challenges in the winter months of 2023, especially in countries with gas - intensive industrial sectors. in fact, the recent purchasing managers'indices ( pmis ) in the manufacturing sector have dropped notably. food price inflation also rose in august, to 10. 6 per cent, reflecting higher input costs related to energy, disruptions of trade in food commodities and adverse weather conditions. while supply bottlenecks have been easing, these continue to gradually feedthrough to consumer prices and are putting upward pressure on inflation, as is recovering demand in the services sector. the depreciation of the euro has also contributed to the rising inflationary pressures, together with the aforementioned supply and demand factors. governing council latest meeting decision against this background, in our latest meeting last thursday, the governing council of the ecb decided to raise the three key ecb interest rates by 75 basis points. this significant step frontloads the transition from the prevailing accommodative level of policy rates towards levels that will enable the timely return of inflation to our two per cent medium - term target. current challenges of monetary policy let me now elaborate a bit more on some of the most important challenges that monetary policy faces today. the crux of the matter is that the pandemic and the war in ukraine have created significant macroeconomic uncertainty, associated with a high degree of output growth and inflation volatility. in such an environment of lasting output and inflation volatility and uncertainty, one