zero over the entire calendar year 2023 ( slide 12 ). the tpi, by contrast, is a new instrument in the ecb ’ s toolkit. its targeted orientation and conditionality ensure the smooth transmission of monetary policy, even in times of heightened uncertainty and volatility, thus enabling monetary policy to pursue its key task of maintaining price stability. by announcing possible interventions or, if necessary, by carrying out targeted, temporary interventions, the central bank can quickly restore confidence and prevent destabilising interest rate spirals, which might otherwise drag the euro area into a severe crisis. in this respect, the tpi is an expression of monetary rather than fiscal dominance. indeed, the announcement of the tpi is likely to have been an essential precondition for the ecb to be able to increase rates to such a large extent and so avoid a deanchoring of inflation expectations and ensure price stability. under the tpi, the ecb cannot counter persistent tensions that are due to country fundamentals. it could only do so in combination with a macroeconomic adjustment programme under the outright monetary transactions ( omt ) programme. these precautions ensure that market discipline is preserved. within the tpi there is no interest rate level that is targeted ; this level remains fully determined in the market, with the substantial differences in sovereign bond yields across euro area countries reflecting different fundamentals. the tpi can only be used to tackle disorderly dynamics that temporarily prevent price determination in the market. these conditions preserve the incentive for sound fiscal policies. fiscal discipline and structural reforms are the best protection against fiscal dominance the best protection against fiscal dominance is therefore a future - proof fiscal policy. this is precisely why the european treaties provide for a fiscal framework that permanently guarantees the central bank ’ s independence. the challenges for fiscal policy are likely to increase in future. as long as the yields on newly issued sovereign bonds surpass the average yields on outstanding debt, the interest burden will increase. for example, a prolonged period of high interest rates will gradually affect the interest - growth differential ( r - g ), which, in addition to the evolution of government primary balances, determines the development of public debt ratios ( slide 13, left - hand side ). whether ( r - g ) will become a burden in the medium term will largely depend on how fiscal policy will tackle the multiple structural challenges facing our economies. an ageing society, the need for higher defence spending in view of the changed geopolitical situation,

, household financial vulnerabilities remain elevated, although we will be analyzing the positive implications of a higher household savings rate for those vulnerabilities. all things considered, then, it was governing council ’ s view that the balance of risks does not warrant lower interest rates at this time. in forming this view, we weighed the risk that inflation could fall short of target against the risk that a lower interest rate path would lead to higher financial vulnerabilities, which could make it even more difficult to attain the inflation target further down the road. clearly, this balance can change over time as the data evolve. in this regard, governing council will be watching closely to see if the recent slowdown in growth is more persistent than forecast. in assessing incoming data, the bank will be paying particular attention to developments in consumer spending, the housing market and business investment. with that, senior deputy governor wilkins and i will now be happy to take your questions. 2 / 2 bis central bankers'speeches