to demand. however, high wage pressures, the outcome of upcoming wage negotiations and intensifying geopolitical tensions add on uncertainty around the future path of inflation. the rapid pace of disinflation that we observed in 2023 is likely to slow down in 2024, and to pause temporarily at the beginning of the year, as was the case in december 1 / 4 bis - central bankers'speeches 2023. positive energy base effects will kick in and energy - related compensatory measures are set to expire, leading to a transitory pick - up in inflation, similar to what has happened with spanish headline inflation in recent months. inflation in spain peaked in july 2022, reaching 10. 7 %, and disinflation set in earlier than in other euro area countries, with the rate coming down to 1. 6 % in june 2023. since then, the large drop in energy prices has fallen out of the calculation and inflation increased by an average of 3 % between july and december. economic activity by contrast, growth developments are more disappointing. economic activity in the euro area slowed slightly in the third quarter of 2023. soft indicators point to an economic contraction in december too, confirming the possibility of a technical recession in the second half of 2023 and weak prospects for the near term. the slowdown in activity appears to be broad - based, with construction and manufacturing being particularly affected. services are also set to soften in the coming months as a result of weaker activity in the rest of the economy. the labour market continues to be particularly resilient to the current slowdown. the euro area unemployment rate stood at 6. 4 % in november, broadly unchanged from october and close to its historical low. however, we are seeing the first signs of a correction taking place in the labour market. the latest data on total hours worked show a slight decline in the third quarter, the first since the end of 2020. this is mainly driven by the reduction in the average hours worked offsetting the increase from the rise in employment. the continuous decline in job vacancy rates, which marginally decreased again in the third quarter, suggests that the ongoing labour market adjustment may also weigh on the number of jobs. financial and monetary conditions with regard to financial and monetary conditions, our past interest rate increases continue to be transmitted strongly to financing conditions, with lending rates for business loans essentially unchanged in november, at over 5 %, and mortgage rates increasing to 4 %. the tight

decisions are taken with unanimity – you have to defend that decision. there are 25 of us and, for sure, there are sometimes different views, but when a decision is taken by a clear majority, it is important to defend it. it would be much better if we tried to reduce the level of surrounding noise. would it have been difficult for president draghi to push the package through had a majority of the executive board been against it? the basis of the package was the outlook. inflation expectations are not de - anchoring, but there is a potential risk that they could do so, and the threat of deflation could come to the fore. that ’ s why we reacted. the core element of the package was forward guidance. people have not paid much attention to that, but in my view, that was the main, important message. and afterwards we took other measures : cutting the interest rate, “ tiering ”, targeted longer - term refinancing operations, and finally the asset purchase programme ( app ). but forward guidance is the main element and the core reference for how things can evolve in the near future. one central bank governor recently suggested life would be much easier for the ecb if it simply accepted inflation rates at closer to 1 % than 2 %. where do you stand? 1 / 3 bis central bankers'speeches our remit is to achieve price stability, and price stability according to our present definition is below, but close to, 2 %. whether it is symmetric or not is a different question – while it ’ s not a minor question, it ’ s not the most important one either. the third element we are perhaps overlooking is the reaction function : how powerful our instruments are in their ability to push up inflation. i think that ’ s the real point. we have not entered into discussion over whether the target should be modified. it will be discussed by the governing council and perhaps with a new president it will be different. but for me the kind of monetary policy decisions you take and the tools you have to achieve the target are much more important. it ’ s been argued that tiering is in effect a rate increase ….. no, i don ’ t think so. tiering is a form of mitigation. that ’ s why it was set. is it a form of mitigation that lays the ground for further rate cuts? we haven ’ t discussed it, but my impression is that – 0. 50 % is