withstand economic shocks. to enhance resilience over the medium term, the focus should remain on improving the effectiveness of the macroprudential toolkit and faithfully implementing basel iii. in the non - bank financial sector, it is imperative to reduce vulnerabilities arising from liquidity mismatch by better aligning redemption terms with asset liquidity. international efforts should prioritise developing a globally consistent approach for addressing risk from leverage – including synthetic leverage. high financial market volatility and associated liquidity challenges have once more highlighted the need to improve margining practices and the ability of non - banks to meet margin calls in derivatives transactions. the currently high inflation is expected to stay above our target for an extended period. our monetary policy must therefore remain focused on reducing support for demand and guarding against the risk of second - round effects. amid the present uncertainty, future decisions on policy rates will continue to be data - dependent and taken on a meeting - by - meeting approach. the policy decisions we will take at our next meeting will be based on various elements, including our december macroeconomic projections. at this meeting, we also expect to lay out the key principles for reducing the bond holdings in our monetary policy portfolios. we will proceed with prudence, continuing to normalise our monetary policy in line with our medium - term price stability objective. 4 / 4 bis - central bankers'speeches

luis de guindos : outlook for the euro area economy and financial stability speech by mr luis de guindos, vice - president of the european central bank, at the 25th frankfurt euro finance week, frankfurt am main, 14 november 2022. * * * it is a pleasure to take part in this edition of the frankfurt euro finance week, which i have attended every year since joining the ecb. i will start by providing an overview of the euro area economic outlook that underpinned october's governing council deliberations. i will then discuss how we see the risks to financial stability. euro area economic outlook one year ago i said that growth prospects appeared quite positive following the rebound in economic activity in the first three quarters of 2021, as lockdown measures were lifted and vaccination rates rose. but as we know, the euro area growth outlook has deteriorated significantly since then. one year on, the russian invasion of ukraine and the ensuing global energy crisis have added to already high inflationary pressures, which continued to rise throughout 2022. as a result, economic activity has slowed down to the point that we cannot rule out a technical recession at the turn of the year. in fact, the euro area economy grew by 0. 2 % in the third quarter of this year, significantly slower than in the second quarter. by reducing people's real incomes and pushing up costs for firms, high inflation continues to dampen consumption and investment. severe disruptions to the gas supply have exacerbated the situation, and both consumer and business confidence have plummeted. after a strong performance in previous quarters demand for services is slowing, and survey - based indicators for new orders in the manufacturing sector are falling. moreover, global economic activity is growing more slowly, reflecting the impact of continued high inflation, tightening financial conditions and elevated geopolitical uncertainty. as the prices paid for imports rise faster than those received for exports, worsening terms of trade are weighing on incomes in the euro area. at the same time, inflation remains far too high, having risen to 10. 7 % in october. since the start of the monetary union, we have not witnessed such a rapid shift in the inflation environment. headline inflation in the euro area – which was negative as recently as december 2020 – has risen by 11 percentage points from its low during the pandemic to its level last month. the further increase in inflation in october was broad - based across all its main components. soaring energy and food