medium term. the ecb governing council decided in march to reduce purchases under the app asset purchase programme more quickly than previously intended – from €40 billion in april to €20 billion in june. incoming data since this decision reinforce our expectation that net asset purchases should end in the third quarter. looking ahead, our monetary policy will depend on the incoming data and our evolving assessment of the outlook. adjustments to the key ecb interest rates will take place “ some time after the end of net purchases under the app ”. however, given the high level of uncertainty, adjustments should be gradual. in my view, we must stay alert with respect to upside risks to price stability over the medium term. there is less and less of a concern that a premature monetary policy normalisation could plunge the economy back into the low inflation setting of the previous years. instead, i see that the risk of acting too late is increasing notably. given the extraordinarily high uncertainty surrounding the future path of inflation, we should not delay the exit from the very 5 / 7 bis central bankers'speeches accommodative monetary policy, since a less expansionary monetary policy stance provides the most flexibility. in the current situation, it is therefore more important than ever that central banks act in time. their action should be foreseeable, gradual, and data - dependent. this way, debtors can better cope with an increase in interest rates, and accordingly, risk premia are expected to rise to a limited extent. as inflation in the euro area continues to run high, we need to act. i expect the net purchases under the app to be discontinued at the end of june. and if both the incoming data and our new projection confirm this view in june, i will advocate a first step normalising ecb interest rates in july. as central banks consider how to bring inflation back down to target, it is worth recalling the conditions under which the last, most prominent disinflation episode – the volcker disinflation at the end of the 1970s – played out. over the course of this policy, nominal interest rates in the us rose above 20 %. of course, at that time the situation was different in many respects. debt ratios were much lower than they are today, for both public and private debt. inflation had already been higher in the 1960s and early 1970s. and arguably, before this episode, the fed may have been less independent and less focused on inflation than it is today. there is

##think the policies of central banks. there is another important factor that could push inflation higher in the future. and that factor 4 / 7 bis central bankers'speeches could be strengthened by the russian aggression against ukraine. i am talking about the green transformation of our economies. this process of “ decarbonisation ”, as it is known, which gained urgency as this new geopolitical event unfolded. in particular, our economies ’ dependence on fossil energy is increasingly becoming an issue not only for climate policy but also for national security. in general, carbon pricing is considered the most efficient way to reduce carbon emissions. higher carbon prices have an impact on carbon emissions, but also on consumer prices. at least during the transformation period, they would make energy more expensive and drive up the production costs of goods. furthermore, the necessary, accelerated transition to renewable energies inevitably implies new and costly capital investment, while existing capital stock has to be written off more quickly than expected. one specific aspect of this is investment in the carbon industry. according to the international energy agency, investment in oil and gas supplies has been reduced sizeably since 2015, in part because of uncertainty about climate - related policy measures. this low investment would suffice to meet demand only if there are strict climate policies to reduce carbon - related emissions to net zero by 2050. under currently implemented climate policies, however, projected demand is higher than supply. 7 during the transition phase, the decarbonisation of our economies may thus add to inflationary pressures. we do not know exactly to what extent. but even in the case of an orderly transition, the euro area could temporarily experience significant price pressures. the network of central banks and supervisors for greening the financial system estimates that climate policy measures could increase annual inflation rates in the period up until 2030 by between 0. 3 pp and 1. 1 pp, relative to a scenario without climate change and without climate policies. these numbers are the outcome of an orderly transition. in alternative scenarios, figures could be much higher. 8 to sum up : the war in ukraine is unlikely to bring about major new inflation dynamics on its own. but it may clearly accelerate pre - existing tendencies in both the short and the long run, as exemplified in energy markets and international trade. 4 implications for monetary policy how should monetary policy respond to these developments? clearly, the eurosystem must ensure that the current elevated inflation does not become entrenched and persist at an excessively high level over the