special pandemic programme in march this year, we are now winding down also other asset purchases. soon, preferably by july, net asset purchases should be fully completed. this would allow for the first ecb rate hike since 2011. the next policy steps will depend on incoming data and prospects for approaching our 2 % inflation target in the medium term. given the uncertain economic outlook, it is important to move on gradually. by being able to flexibly reinvest maturing bonds from the pandemic portfolio, we will continue to work against increased fragmentation in the bond markets. while is a priority for the eurosystem to navigate the challenges of elevated inflation, monetary policy interacts with fiscal and other policies. fiscal and monetary policy consider each other's actions when designing policy measures. acting within their own mandates, the two policies can be mutually reinforcing. stabilisation of the economy after the pandemic shock is a great example of this! however, in times of high inflation and slowing economic growth - that put low - income households in a particularly difficult position - mutual policy support is a greater challenge. in order not to hinder the moderation of inflation, fiscal support should be targeted at the most vulnerable households and businesses. excessive and too general mitigation of the burden of rising living costs would further stimulate aggregate demand and, in turn, the growth of prices. governments should also carefully consider potential increases in minimum wages and the wages of civil servants. it is important not to fuel the risk of second round - effects from the currently high inflation and rising inflation expectations being transmitted to higher wage and price pressures in the euro area. due to high inflation and the expected normalisation of our monetary policy, borrowing in the financial markets has become more costly for sovereigns, banks and corporates. similarly, the bank lending rates for households and corporates have also started to rise, though at a slower pace. 3 / 5 bis - central bankers'speeches despite considerable increases in the yields of sovereign bonds, the costs of borrowing by the euro area governments are still manageable. average yields that governments pay on their outstanding debt remain low in historical terms. moreover, with high inflation and further economic growth, government revenues have also increased. however, given the elevated public debt levels of several countries and the slowdown in economic growth, further tightening of government borrowing conditions will put pressures on fiscal policies. at the same time, governments are facing rising costs related to population ageing, and

great depression, keynes wrote : “ it seems unlikely that the influence of [ monetary ] policy on the rate of interest will be sufficient by itself. i conceive, therefore, that a somewhat comprehensive socialization of investment will prove the only means of securing an approximation to full employment. ” these words are very relevant at the current juncture as well. the ecb has emphasized that fiscal policies should support the economic recovery while remaining in full compliance with the eu ’ s fiscal rules. otherwise, credibility in the fiscal framework cannot be maintained. a critical question, therefore, is whether the prevailing rules could be barriers to achieving the desired coordination of monetary and fiscal policies. there are two key prerequisites for obtaining effective fiscal support to monetary policy within the stability and growth pact rules. governments must have adequate fiscal space and fiscal policy must ensure the sustainability of public finances. in both respects, there appears to be little room for a meaningful fiscal expansion within the existing rules. there is broad agreement that the fiscal framework has failed to ensure long - term sustainability while avoiding procyclical fiscal behavior. countries did not build up sufficient fiscal space during the pre - crisis expansionary period and fiscal space narrowed following the onset of the financial crisis. public bis central bankers ’ speeches debt increased sharply during the crisis years and the policy focus turned to an austerity mode when market pressures heightened. most of the eurozone countries still face long - term fiscal sustainability issues and are expected to keep their fiscal consolidation effort, in terms of the cyclically - adjusted deficit, ongoing. in 2016, only four countries – namely, germany, luxembourg, cyprus, and estonia – have fiscal space for additional discretionary measures according to the stability and growth pact rules. what then is the way forward? it has been emphasized on many occasions that for countries without fiscal space, fiscal policy can still support demand by altering the composition of the budget. in particular, they point out that consideration should be given to cutting distortionary taxes and unproductive expenditure and increasing investments that improve total factor productivity over the medium term. investment and structural reforms that increase the growth potential of the economy create fiscal space by raising future government revenues. it should be noted that some of these measures will require political resolve and social support as they are likely to affect social entitlements. some analysts have remarked that these measures will not have much impact in the short term. should there be a re - thinking of the monetary policy framework? in a recent blog in