one we have today, any change in the policy stance must be prepared carefully and implemented very gradually. and such a change must also be supported by sufficient evidence that growth is translating into a path of sustained adjustment in inflation towards below, but close to 2 %. ” so you ’ re not yet seeing a sustained rise in inflation? praet : “ inflation has recently been quite volatile. we ’ ve always maintained that we should look through short - term volatility. that ’ s why what counts most now is underlying inflation, for example core inflation ( inflation excluding the more volatile elements, such as energy, ed. ). and that ’ s still on the weak side. in recent months we ’ ve seen producer prices rising worldwide, and now even in europe somewhat. in the past, the pass - through from producer prices to consumer prices for non - energy industrial goods, an important component of core inflation, typically took one to two years. we ’ ll have to wait and see how fast it will go this time. we are also looking at prices in the services sector, which are to a large degree determined by wages. in the past, we have sometimes overestimated wage inflation, as we failed to properly factor in people who gave up on the job market or those forced to accept part - time rather than 1 / 4 bis central bankers'speeches full - time jobs. but we now have a better picture of underutilisation in the economy, which is greater than the official unemployment figures would have us believe. recently, the gap between that broadly defined unemployment and the traditional measure has begun to narrow. that suggests people are returning to the job market. over the next couple of years the pressure on wages should start to feed into inflation. things are evolving in the right direction. we ’ re not trapped in a low inflation environment. ” you ’ re happy that inflation is returning? praet : “ we currently have increased confidence in the path of inflation that we have outlined in our forecasts. but before we can start scaling back our policy, even gradually, we ’ d like to see further confirmation. we believe that the output gap ( the gap between potential production and real production, ed. ) will have closed by 2019, and that price pressure will follow as a result. however, for the time being, economic developments are still dependent on very favourable financing conditions, for which monetary policy plays a very important role. but there are other factors too. financial conditions

appropriate. climate change before i conclude my comments this morning, let me say a few words about climate change. too often we think of resilience in terms of reserves, cost - cutting or operational risk. of course these are and will remain very important, and the very high cost to income ratio in the credit union sector still needs to be addressed. it is important that hard decisions on cost management within credit unions are not postponed, or not taken at all, due to rising revenues on the back of interest rate rises. similarly, given the increased risk of harm from phishing, ransomware and social engineering, firms, including credit unions, need to invest in and protect their systems, upskill and educate their staff and identify and address potential vulnerabilities. but managing the impact of climate change is also a critical factor in ensuring future resilience, and this is relevant for all sectors in financial services, including credit unions. we issued you with a climate - related and environmental risks survey, and have reviewed your responses. your participation in that survey was strong, and i want to thank you for that. on balance, what the survey told us is that credit unions are considering climate related and environmental risks, and understand the impact of these risks on their business. however, despite this level of awareness, more needs to be done to manage and mitigate these risks to ensure credit unions remain resilient. we will be writing to all credit unions about our observations, and our supervisory expectations. conclusion and to conclude. i wish you and the wider credit union movement continued success particularly as you navigate the challenges posed by the changing financial services landscape, and as you implement change within your own sector. you can be assured that the central bank will engage, and provide support where possible, where you seek to implement appropriate strategic and business model change. i would like to thank you for your time this morning, and wish you well with the remainder of your conference. and i'll finish as i started, with a quote from heraclitus : " the meaning of the river flowing is not that all things are changing so that we cannot encounter them twice, but that some things stay the same only by changing. " 8 / 9 bis - central bankers'speeches 1 i would like to thank michael smyth and eamon clarke for their contribution to my remarks. 2 see reptrak 9 / 9 bis - central bankers'speeches