gradual withdrawal of the extraordinary monetary stimulus measures implemented during the pandemic, once these had succeeded in countering the adverse impact of the pandemic on the projected medium - term inflation path. the speed and intensity of this normalisation has been conditioned by the assessment made at each time by the ecb ’ s governing council on the inflation outlook and risks. the measures taken by the ecb in this period are part of the new monetary policy strategy approved in 2021, which established a symmetric medium - term inflation target of 2 %. later i will return to the medium - term orientation and to what it means in practice. under this framework and, as i have said earlier, in a setting in which inflationary risks have tended to increase over the last few months, in march we discontinued net purchases under our pandemic emergency purchase programme ( pepp ) and we agreed to gradually reduce net purchases under our asset purchase programme ( app ). in june we decided that as the three conditions established by our forward guidance for raising interest rates had been met, 5 net purchases under the app would end on 1 july, and we informed of our intention to raise policy rates in july and again at our september meeting. 6 in july, we decided to raise all three ecb policy rates by 50 basis points ( bp ), taking the deposit facility rate to 0 %, thus moving out of negative territory for the first time since 2014. this was a larger increase than signalled at the previous meeting, for two reasons. first, the updated assessment of the risks to inflation, which included the materialisation of certain upside risks in the short term relative to the june projections. second, we took into account the reinforced support for the effective transmission of monetary policy provided by the new transmission protection instrument ( tpi ), which was approved at that same meeting. subject to fulfilling established criteria, the tpi will enable the eurosystem to make secondary market purchases of securities issued in jurisdictions experiencing a deterioration in financing conditions not warranted by country - specific fundamentals, to counter risks to the monetary policy transmission mechanism to the extent necessary. thus, the tpi will ensure that our monetary policy stance is transmitted smoothly and effectively across all euro area countries, a precondition for the ecb to be able to deliver on its price stability mandate. purchases under the tpi would be conducted such that they cause no persistent impact on the overall eurosystem balance sheet and hence on the monetary policy stance. 7 this forward

increase the likelihood of the feared de - anchoring of inflation expectations. on the information available, there is no evidence of such effects occurring at present, at least on a widespread basis. wage settlements in the euro area have gathered pace since the end of last year, with increases reaching 2. 5 % according to the latest data. although they are expected to rise further in 2023, the increases currently projected would, in principle, be compatible with the 2 % inflation target once trend productivity growth is taken into account. broadly speaking, profit margins have also remained moderate, although unevenly across sectors. however, the longer the current high inflation persists, the greater the probability of these second - round effects occurring. naturally, the extent of the economic downturn, over which, as i indicated earlier, there is significant uncertainty, and its effects on wages and profit margins, will be key determinants of the medium - term inflation outlook and, therefore, of our monetary policy decisions. ultimately, our next decisions will be based on the incoming data and their implications for achieving our medium - term inflation target, in line with the “ meeting - to - meeting ” approach that we have adopted. in any event, interest rates will have to reach a level that allows us to ensure a gradual convergence of inflation to our medium - term target, and how quickly we reach that level will be conditioned by that same target. on the financial markets, the process of monetary policy normalisation has translated into a significant increase in market interest rates. specifically, since early 2022 the 12 - month euribor has climbed by more than 250 bp to 2. 26 %, while the 10 - year overnight index swap ( ois ) rate ( typically used as the risk - free benchmark interest rate ) has risen by 210 bp. these increases have also been gradually passing through to the cost of bank funding for firms and households. this tightening of financial conditions will help to contain inflationary pressures. in an adverse scenario such as the present one, other economic policies also have a central role to play, in the shape of an incomes agreement, selective support for the most vulnerable, resolute supply - side policies, a firm commitment to fiscal sustainability and reinforcement of the european project against the current inflationary backdrop, profit margins and wages are key to avoiding a feedback loop that results in an inflationary spiral. this is precisely the overriding objective of the incomes agreement that we at the banco de espana have been advocating in recent