the first few months of 2022. this is the assumption the bundesbank economists have based their latest forecast on. 2 if the protective measures continue to be swiftly rolled back, german economic output could make a quick recovery, returning to its pre - crisis level as early as this summer – that would be half a year earlier than anticipated in the december 2020 forecast. in 2021, then, the german economy could see growth of just under 4 %, even increasing to slightly more than 5 % in 2022. vibrant private consumption will be the chief driver of this strong upswing. you see, if hotel and 1 / 5 bis central bankers'speeches restaurant services and recreational facilities, say, gradually reopen their doors to the general public, people will get a chance to consume again in establishments that once were closed. there ’ s also the matter of the additional savings that households have accumulated precisely as a result of the pandemic - related restrictions that have been in force hitherto – by our estimate, these have arguably added up to around €200 billion this year and last. according to a bundesbank survey, the overwhelming majority of consumers would like to use at least part of the savings they have often built up involuntarily to purchase goods or services. this is why the forecast is based on the assumption that around one - quarter of coronavirusrelated additional savings will be channelled into consumption in the next two years. 3 it is therefore likely that the hard - hit services sectors will catch up with industry and that the pace of recovery in the country ’ s economy will converge again more strongly. overall, then, the normal level of capacity utilisation in the german economy could be exceeded as early as the start of 2022. many people are worried that the spectre of inflation might return as the economy gets back on its feet, and that ’ s a concern i take very seriously. however, these inflationary risks should not be overstated – in the same way that i deemed the partly excessive deflation debate to be unhelpful in the years prior to the pandemic. the inflation rate in germany did indeed spike significantly higher at the start of the year, and our economists are expecting it to climb still further in the months to come. inflation rates of as high as around 4 % may even be possible towards the end of the year, as measured by the harmonised index of consumer prices. this will reduce households ’ purchasing power. but let

sector. favourable financing conditions provide the pepp with bearings to counteract the pandemic - induced downward pressure on projected inflation. to this end, the ecb governing council considers the financing conditions for all non - financial sectors – that is, for enterprises, households and the public sector. it also observes various stages of the transmission process of monetary policy to the economy. as well as monitoring various indicators, it ’ s also important to analyse the reasons that led to a change in those indicators, because it ’ s not a matter of using monetary policy to cement a particular interest rate level. the aim is merely to prevent a premature deterioration in the funding environment, which would drag on the economic recovery and thus on the inflation outlook as well. considering what might be behind the change in the indicators is particularly relevant, not least in 3 / 5 bis central bankers'speeches the current situation. you see, nominal yields on government bonds are up in the year to date. to a large extent, though, that ’ s due to inflation expectations, which are moving towards our target. higher yields on government bonds, then, are also a sign that our monetary policy is working. furthermore, better economic prospects usually also go hand in hand with higher real interest rates. financing conditions therefore always have to be assessed in combination with economic developments. and it is indeed the case that financing conditions are still favourable, all things considered. advances on the vaccination front mean that the economy in the euro area, too, is now probably making its way out of the crisis. this has implications for the pepp, because the programme is clearly tied to the pandemic and must come to an end once the emergency situation has been overcome – that has been a hugely important point for me ever since the pepp was introduced. at that time, in march 2020, ecb president christine lagarde summed up the contingent nature of the programme when she tweeted : “ extraordinary times require extraordinary action ”. 8 but when is the emergency situation over as far as monetary policy is concerned? ultimately, it ’ s up to the ecb governing council to answer that key question. i see two preconditions for discontinuing net purchases under the pepp altogether. one is the expiry of all key measures introduced to contain the pandemic which restrict economic life. that, you see, would be a sign that enough has been done to suppress the pandemic or to overcome the