now more important than speed ; the duration for which we will maintain rates is now more important than the precise terminal level we will reach. or in other words, for interest rates as with ballistics, " longer " is becoming more significant than " higher ". c. hence, our next rate decisions should not focus such attention ; we already have completed most of our rate - hiking journey, and we are clearly in restrictive territory. that said, as i said already last january, i expect today that we will be at the terminal rate not later than by summer, which starts in june and ends in september. hence we have three possible governing councils either to hike or to pause ; but don't deduce a guidance from this or a preference for a given terminal rate. we will remain data driven, looking meeting by meeting at the outlook for headline as well as for underlying inflation. monetary policy is at work and rest assured, we'll do the job : we'll bring inflation back towards 2 %. we'll do it with the necessary patience – looking at the 2025 horizon for full transmission, with persistence – maintaining restrictive interest rates for long enough, and pragmatism – monitoring actual economic data. but once more, monetary policy cannot be the only game in town. fiscal policies should adjust and consolidate, first and foremost scrapping energy subsidies as the european commission rightly advocated yesterday ; wage negotiations and mark - up decisions by firms should incorporate the expected decrease in inflation ; and still more, structural reforms are needed more than ever to increase the supply - side capacity and flexibility in europe and in france. 3 and 2 / 3 bis - central bankers'speeches this is where capital markets union would greatly help to finance investment and innovation, and hence reduce inflation. let us acknowledge it : if we are lagging behind today in europe, it's in this domain of supply transformations, and not in monetary policy. 1 smets and wouters ( 2005 ) ; see also ecb nawm model presented in p. lane's lecture on 16 / 02 / 2023, " the euro area hiking cycle : an interim assessment ". 2 badinger and schiman ( 2023 ), measuring monetary policy in the euro area using svars with residual restrictions american economic journal : macroeconomics 2023, 15 ( 2 ) : 279 – 305, or ; see also ecb - base model. 3 francois villeroy de galhau, letter to

in line with our supervisory expectations. given the difficulties to assess the exposure to and the impact of climate - related risk we have not assigned to this exercise quantitative objectives, beyond providing participants and us with a first bottom up assessment of their exposure, based on common assumptions, assessment which appears to be moderate by 2050. in particular, we didn ’ t set as an objective to assess the extent to which the current regulatory framework is sufficient and well suited to absorb climate - related risks, and whether additional supervisory capital requirements would be legitimate. models, metrics and methodologies developed so far are still in their infancy and the data too sparse to allow drawing firm conclusions about the loss absorption capacity of current capital levels. nonetheless, we already see at the acpr these exercises as prudential tools, as they have proved helpful to us at incentivizing financial institutions to give the proper level 1 / 3 bis central bankers'speeches of priority and resources to the monitoring and management of climate - related risks. the publication in november 2020 of the ssm guide on climate and environmental - related risk was driven by the same logic and the preparation underway of an ssm stress test should provide an additional step at european level towards more supervisory scrutiny in the process of fully integrating these risks into the day - to - day risk management of banks. 2 - there are also a few lessons that can be drawn from our experience from a methodological standpoint, as the use of such scenario analysis by supervisors is likely to be repeated and is likely to spread among supervisors. i would like to highlight two of them. first, tremendous progresses have been made in the domain of climate risk scenarios under the aegis of the network of central banks and supervisors for the greening of the financial sector, the ngfss. thanks to this “ coalition of the willing ”, gathering today more than 90 central banks and supervisors across the world, high level scenarios were published in july last year, updated a couple of weeks ago by a set of 6 scenarios. this set of global reference scenarios provide a good basis for financial authorities. of course, the ngfs should continue to develop and refine those scenarios. however, there will remain the need to tailor those scenarios to the circumstances of each jurisdiction, for instance specifics of their climate policies, or more precise meteorological data at the national level. in addition, st may legitimately differ along other methodological dimensions. a case in point is the use or not of a dynamic balance sheet assumption