been very low for more than a decade, and they are still lower than they were before the global financial crisis. the ecb has not been alone in how it has acted. some central banks started to normalise their monetary policy even earlier, and the exit from the highly accommodative monetary policy has been swifter than was expected. headline inflation started to come down towards the end of last year, mainly thanks to a decline in energy prices, and it fell to 8. 5 % in january. more worrying however is that 5 / 8 bis - central bankers'speeches core inflation has remained persistently high at more than 5 %, as the underlying price pressures are not yet receding. the ecb governing council consequently announced last month that it will continue to raise interest rates and keep them high enough to bring inflation back to its target of two per cent in the medium term. we also indicated that we intend to raise interest rates by another 50 basis points at our next monetary policy meeting in march. it is most likely this will not be the last rate rise in this cycle, and it is quite possible that interest rates will need to stay high for quite some time so that we can be sure that inflation will come back to, and remain at, close to two per cent. central banks need to focus on second round effects from inflation, and prevent large but temporary price surges, like those we have seen in very volatile energy and food prices, passing through into other prices, labour costs and inflation expectations. if they do, they could cause a wage - price spiral, which would then stop inflation from falling back to its medium - term target level after the temporary shocks have faded. the interaction of monetary, fiscal and structural policies high inflation is clearly a challenge not only for people, companies and central banks, but also for governments. europe has recently witnessed significant turmoil in energy markets and governments have tried to find ways to provide relief to households and companies either by direct subsidies or through new regulations in the energy markets. but even before the russian invasion of ukraine, it was expected that the green transition would push energy prices up. the signal given by that rise in energy prices was intended to have an important role in encouraging the green transition. the problem now is that not only are energy prices being steered by the green transition, but they have also moved much more sharply because of the extreme tension in geopolitics. we should distinguish between two features of the current problem. the first is

##e taught for thirteen years in the prestigious columbia university in new york. there he mainly focused on development economics, earning a great reputation as an international advisor on the subject. he died unexpectedly and still relatively young at only 51. the view of ragnar nurkse of the time notes his thorough knowledge of economic theory and practice, his original ideas, and his clear vision. he was the sort of man who is clearly needed in the world today. when estonia regained its independence it chose the path of reform, with a unique combination of conservatism, innovation and a recognition of its own limitations. estonia chose once again the road to europe. eesti pank concentrated on stabilising the economy and on earning and maintaining confidence in the estonian currency. today the european union and its member states are estonia ’ s main partners both economically and politically. working together with the european system of central banks has become a matter of course for eesti pank, be it in monetary policy, financial stability or economic analysis. we are in an unprecedented position to engage in defining the economic world around us, and our input is listened to. evidently there are limits on how much a small country can contribute in the functioning of the european union, because smaller countries have fewer resources. but we can widen bis central bankers ’ speeches those limits by making the best use of our resources, by learning from our own experience and that of our partners, and by working well together. working together is particularly important right now, at a time of geopolitical tensions in and around estonia and of deepening insecurity. it is right now that we need to find the ideals, the ideas, and the goals that can bring us together, and we must work together to achieve them. i wish us strength and good luck in all of this. thank you again. bis central bankers ’ speeches