in 2022, increasing markedly since december, and 2. 1 per cent in 2023. the outlook has severely worsened since the cut - off date used in the projections. looking beyond the short - term volatility of oil and gas prices, whose fluctuations follow the unfolding of the conflict and of diplomatic efforts, there are grounds to believe that these projections are already outdated. it is clear that households will be hard hit by the energy ( and food ) price shock, particularly those in the lower income brackets, with higher propensity to consume and lower savings buffers. the situation of elevated uncertainty will affect the less liquidity - constrained households, whose precautionary savings are likely to rise, in line with historical regularities, negatively affecting consumption. the dramatic increase in uncertainty also suggests that, in the current circumstances, focusing on scenarios analysis is a more useful and wiser approach than relying on point projections. the war also considerably increases the tail risks. here i am primarily referring to the worrying possibility of gas shortages pushing energy prices further up or forcing for some time gas and electricity rationing, disrupting production. but market integration and multilateral cooperation also risk being very much affected. what we are living through is a profound, as well as dramatic, watershed, which may lead to economic patterns that are now difficult to define. in this respect, i believe that the public discussion that has followed the ecb governing council ’ s latest decision about the perceived prevalence of a hawkish tone lacks focus. by acknowledging the situation of high knightian uncertainty that we are facing we decided that we could not commit our actions beyond the very short term. even proceeding along the path of gradual monetary policy normalisation, we chose to keep all our options open, as it is clear that we are not yet in a position to fully assess the economic implications of this unprecedented situation. on one hand, second - round effects on nominal wages and longer - term inflation expectations have to be closely monitored ; on the other, the effects on real activity and incomes, and through them on aggregate demand and price developments, obviously have to be taken into account. our contribution – and responsibility – in such difficult times is not to increase but instead to reduce uncertainty. to this end, another aspect that plays a very important role is the commitment that, within our mandate and under stressed conditions, flexibility will remain an element of monetary policy whenever the emergence of threats to the transmission mechanism of monetary policy jeopardises the attainment

source : oliner, sichel, and stiroh ( 2007 ). expectations of high future productivity and income gains were most likely a factor underlying the decline in saving rates, which may be rationalized in terms of efficient consumption smoothing : us households were simply taking advantage of borrowing opportunities, fostered by financial deregulation, to consume part of their anticipated future income and wealth gains immediately. however, private agents probably overestimated the effects of productivity gains on permanent income and profits. the transmission of the shock to consumption and investment occurred to a large extent via the rise in equity prices. reasoning in terms of a standard solved - out consumption function, the observed decline in the saving rate is consistent with the hypothesis that consumers perceived the increase in wealth as permanent. in fact, a back - of - the - envelope calculation shows that the decline in the household sector saving rate ( by about 6 percentage points from the end of 1992 to the third quarter of 1999 ) only slightly exceeds what we obtain if we apply the standard propensity to consume out of wealth incorporated in most macroeconometric models, including the fed ’ s, to the actual change in household net worth, and compare it to a counterfactual where net worth grew only in line with disposable income. • the us monetary policy stance generally accommodated the hype in the “ new economy ” in the late 1990s ; by historical standards it was particularly easy for a prolonged period after the turn of the century. following the financial crises that hit the economies of south - east asia and russia ( 199798 ) and the collapse of ltcm ( autumn 1998 ), the federal reserve ’ s policy remained essentially accommodating ; ample liquidity was also provided to counter the risks of the socalled millennium bug. while the ex post fitting of a “ taylor rule ” ( figure 12 ) does not highlight monetary conditions much easier than those that would be implied by a policy responding to output and inflation according to historical standards, it is a fact that they were accommodating what many observers considered to be a bubble in equity prices. in the aftermath of the asian crisis the output gap reversed but monetary conditions still appeared to be appropriate, as a result of inflation and inflation expectations being contained by a number of supply ( as well as external ) factors and the credibility, at the time, of the monetary policy regime. but there was some debate over whether the fed should have started raising rates before the early months of 1999