##b has decided on two further rate increases of 50 basis points each. since november, the interest rate conditions applied to the third series of targeted longer - term refinancing operations ( tltro iii ) have also been made less advantageous for banks to ensure that they are consistent with the broader ongoing normalization process. this change in conditions led some counterparties to repay early 1 / 6 bis - central bankers'speeches the liquidity obtained in past years, leading to a reduction in the eurosystem central banks'balance sheets after years of strong growth. the balance sheet at the end of 2022, the bank of italy's balance sheet assets stood at €1, 477 billion, down by 4 per cent compared with 2021. ten years ago, ahead of the app and pepp purchase programmes, the balance sheet total amounted to around €600 billion. therefore, its size is very large compared with the past ; however, as a result of the ongoing normalization process, it is set to decline, at a faster pace from the current year onwards. securities purchased for monetary policy purposes continue to account for the bulk of the assets. this amount had reached €696 billion at the end of the year, of which about €630 billion was made up of italian government securities. compared with 2021, the total increased by €30 billion. assets held for investment purposes amounted to €147 billion compared with €150 billion in the previous year ; 84 per cent of these were public sector securities, 12 per cent were shares and investment fund shares, and the remaining 4 per cent were other financial assets. by contrast, refinancing operations decreased by €97 billion and stood at €356 billion at the end of the year. the reduction was largely due to early repayments of tltro iii operations as a result of the recalibration of remuneration conditions mentioned earlier. on the liability side of the balance sheet, these repayments were reflected in a decline in credit institutions'deposits, which fell from €406 billion to €246 billion. the decrease in deposits was countered by the €94 billion increase in the bank of italy's negative target balance, which reached €684 billion. the growth was mainly attributable to net sales of public sector securities by foreign investors and italian residents'investment in foreign securities. the outflows were partially mitigated by the increase in italian banks'net

large weight of food components in the price index, this burden has tended to fall more heavily on the lower - income population. also, inflation uncertainty may hinder consumption and investment and, hence, the pace of the ongoing economic recovery. given these prospects, it is crucial to evaluate whether current price pressures are transitory and will not generate future problems for controlling inflation. most importantly, monetary policy will have to be adjusted in a timely way if convergence of inflation to the 3 percent permanent target is endangered. two sources of risk that will have to be monitored are first, the amplification of second - round effects from international price shocks and foreign exchange volatility, and second, evidence of aggregate demand pressures. it is worth mentioning that, as of last august, close to half of the goods that comprise the inpc basket exhibited annual price changes higher than 4 percent, and some indicators of slack in the economy have already disappeared. the most essential challenge to mexican monetary policy remains the anchoring of inflation expectations on the 3 percent permanent target. as reflected in analysts ’ surveys, inflation expectations for the short term have been increasing, while those for longer terms continue to be relatively stable but stubbornly above the objective. concluding remarks finally, the encouraging pace of the ongoing economic recovery does not imply that the economy is growing at rates that are sufficient to meet social needs or exploit potential opportunities. in order to enhance living standards more significantly, mexico has to consolidate macroeconomic stability, by promoting strengthened public finances in preparation for future obligations and difficulties, the convergence of inflation to the permanent target, and further improvement of the regulatory and supervisory framework for financial institutions. additionally, total factor productivity growth should be facilitated. considerable efficiency gains seem possible in the services sector and in non - manufacturing industries, given their size in the economy and the relatively low levels of productivity. this could be accomplished by removing obstacles to the reduction of informality and by facilitating competition. bis central bankers ’ speeches