our net asset purchases, and three consecutive policy rate hikes across our july, september and october monetary policy meetings totalling an unprecedented 200 basis points. today, it is not evident that the observed turn in macroeconomic sentiment will substantially alter the inflation outlook, even if a mild recession were indeed to materialise. against this backdrop, we have communicated that we will continue to promptly withdraw monetary policy support and move policy rates further to a level that is consistent with inflation reverting back to our 2 % target in the medium term. while 1 / 5 bis - central bankers'speeches policy rates remain our main instrument for steering monetary policy, we have made clear that we are ready to adjust all our instruments to maintain the consistency we need in our monetary policy to achieve our primary objective of price stability. datadependent, going meeting - by - meeting. heute wie auch morgen und ubermorgen bleibt die geldpolitik auf der hut und handlungsbereit. banking supervision when macroeconomic tides are shiftingas both an ecb executive board member and the vice - chair of the ecb's supervisory board, i am particularly interested in how banks adjust to the shifting macroeconomic tides. higher interest rates as such are generally good news for banks because – after a decade of exceptionally low interest rates – they improve profitability. indeed, euro area banks performed well in the first half of the year as their net interest income increased steadily, a trend that most analysts expect to continue in the near term as further monetary policy normalisation takes hold. yet, even if the expectation of improved profitability for the median bank comes true in the near term, not all banks are expected to benefit equally from the increase in interest rates. more importantly, banks and we as supervisors need to be mindful that the increase in interest rates does not occur in isolation. it is part of the increasingly daunting and uncertain macroeconomic environment that i have just outlined – an environment that differs from previous downturns in the last two decades in that it is largely characterised by an economy running into constraints. in such an environment, it would not be appropriate to expect fiscal and monetary policy to support the economy by sustaining demand. this combination of factors is one of the many good reasons why the chair of the ecb's supervisory board, andrea enria, has recently insisted that, even if balance sheets are sound and profitability is favourable, it is still better to be safe

than to be sorry in banking supervision, especially in the current uncertain macroeconomic circumstances. 3 - and underlying currents are firming moreover – while the macroeconomic tides may have changed, many of the structural challenges facing banks have not. indeed, the underlying currents which banks were already affected by last year, are still very much present. in fact, important currents have even firmed with the change in tides. this becomes very clear if we look at the consequences of the ongoing climate and environmental crises. another year has passed, and we have further confirmation – not that any was needed – that heatwaves, floods, droughts and environmental degradation are on the rise. the low water levels in the rhine this summer – for decades a moniker for a successful social economic model that has inspired the very objectives of the european union – show how traditional sources of economic welfare are being upended by the climate crisis. 2 / 5 bis - central bankers'speeches at the same time, russia's terrible war against ukraine has hardened the eu's determination to make progress with the energy transition. it's true that, in the very near term, the energy crisis will lead to an increase in the use of non - gas fossil fuels. nevertheless, the likelihood of a transition towards a low - carbon economy consistent with the eu's commitment to reaching net - zero by 2050 has increased. the main message from this should be clear. and it's identical to what i had in my notes for last year, though i will express it even more forcefully today. climate - related and environmental risks are a source of financial risk. even if the exact outcome is uncertain, a combination of physical and transition risks from the ongoing crises will materialise. and with global temperature increases drawing ever closer to 1. 5 degrees above pre - industrial levels, and the world being on track for a 2. 8 - degree increase by the end of the century, these risks are increasingly likely to materialise in a disruptive fashion. we need banks to manage these risks, in line with the expectations for sound risk management practices that we have published in a supervisory guide in 2020. 4 two weeks ago, we published the results of a thematic review of how banks manage climate - related and environmental risks. 5 this is the first time that our core banking supervision teams – the joint supervisory teams – have thoroughly assessed banks'risk management practices in this area. their findings show that, even though banks are starting to manage these risks by