>> it is a dance between the fed and markets. >> the good news is markets have been aggressively repressing future monetary policy. >> this is one of those moments where there is so much uncertainty. >> the fed wants to get into role of the narrative. >> it is a dynamic economy. these are not linear decisions. >> this is "bloomberg surveillance," with tom keene, jonathan ferro, and lisa abramowicz. tom: an historic day on i can --

day for economics. mike wilson will join us with colson -- with caution on the equity markets. the swirl that mr. wilson has to take in, including history at the bank of england. jonathan: it has been 17 years since we had back to back rate hikes at the bank of england. 15 basis points last month. 25 basis points this morning. it could have been 50. that was not the 5-4 vote we were looking for. form embers of the mpc looking for a 50 basis point hike at the bank of england. under bailey saying something which i think is going to be controversial. the living cost crisis would be worse without rate hikes. that is what spoke them. inflation is higher than expected. that is where they want to move. others are taking completely the opposite view. tom: lagarde in 30 minutes in frankfurt. manus cranny will monitor that's conference. you see it on bloomberg radio, on bloomberg television.

what is so important, you go from what the fed is doing, including the testimony today, to the long march in the bank of england, to the dreaded word transitory. jonathan: the ecb things it is transitory still. what is the difference between the eurozone inflation dynamic, the bank of england, the federal reserve? in a word, italy. the ecb has some different things to worry about when it comes to european markets. we are talking about btp's. that is the problem for the ecb as they try to move away from very loose monetary policy. tom: italy is the thermostat for europe. what is so non-transitory is the politics. the president will visit new

york city today on domestic matters, including crime. we saw on fifth avenue yesterday the services for a police officer in new york, dead in the line of duty. i look at all that is going on in economics, finance, and investment, and it speaks about the haves and have-nots. lisa: there is a huge divergence between the analysts who look at rate hikes as tools to prolong the cycle versus tools to cut off the cycle, and there is a small distinction here that is vast when it comes to whether people are arguing for tightening or not. tom: facebook down. jonathan: nasdaq futures get of 2.1% on the s&p 500, down by 1%. yields are higher, breaking back towards 1.80%.

in the gilt market, yields are much higher, particularly at the front-end in the u.k. 12 months ago in negative territory. tom: mike wilson, chief u.s. equity strategist at morgan stanley, is cautious on the equity market. ellen zentner has a -215,000 statistic for the jobs report. maybe it is a one-off. maybe it is not. fold in this american economy into your caution. you walk away from the bull case. mike: the bull case was always that goldilocks would persist into this year. our base case is that gold locks would be challenged. i would say as we talk on this program last time, we were meeting -- we were leaning more towards the bear than the bull. we now have a negative forecast

for nonfarm payrolls tomorrow. the question is, is it just an omicron pair back in hiring, or is it something bigger? we have had this narrative a fire and ice, and we think it is going to be icier. it does not mean recession, but the idea that we are not going to have some payback here from what was a spectacular rebound during the pandemic we think is naive. i think this is really being overlooked, this bifurcation between the lower income cohort and the upper income cohort. without the government transfers , they are the ones burying it. it is going to slow demand. i am probably a bit more cautious on consumption in the first have of this year than my colleagues and my peers around the street. jonathan: you and the team believe fears overgrowth will overtake fears over interest rate hikes.

mike: i think most people would argue that if you are going to have a slow down, you want to go right back into the high multiple growth stocks. the problem with that analysis in my view or that conclusion is that a lot of the growth stocks are also going to see a payback in demand. i don't want to pick on one sector. i think it is pervasive across a lot of different sectors. the stake technology as an example. technology is inherently a physical industry. i remember when it was treated as such. for whatever reason now, people view technology as nondiscretionary spending. it is not. we see companies start to struggle with margins, there's going to be a pare back in spending, and also a payback from overconsumption. the strategy we are employing right now is high quality with

more of a defensive bias because the stability of earnings is going to be more protected. they are not as expensive as some of the growth stocks still. lisa: how far have we gotten to your bear case given some of the pitfalls behind the likes of facebook and now this sort of commensurate loss we are seeing in paypal and spotify? mike: the fire scenario, i think everyone is on board with that. the equity market is somewhat priced for that. i think it is now the slowdown, and there's a little but of peloton in everyone. a little bit of netflix in everyone. maybe now there's a little bit of facebook in everyone. i think if you ask folks a month or two ago, the reality is a lot of businesses benefited from this pull forward during

covid and the stimulus. that is what was got to get through now, this reset on expeditions for growth. our base case is 4400. but we member, you've got to overshoot the downside. even our base case, we will probably reach 4000 in the first half of this year and get more bullish on the index. tom: he's killing me. mike wilson needs to understand there is no peloton in me. jonathan: i was wondering whether there was. tom: thank you. continue with the bear case. jonathan: that takes me to my final question. in conversations like these, we will be top -- will we be talking about single names on the s&p? mike: we do have a focus list of

10 stocks, and right now that is very defensively oriented. it is overweight some of the services areas, underweight consumer discretionary. so we absolutely think this is the year of the stock picker. that was the title of our outlook november. when the tailwinds are gone, picking stocks is harder for portable -- harder for for fully managers this year, but you've got to do it. if got to find the ones that don't have the payback in demand , the overvaluation. those are the variables to focus on, and you go from there. jonathan: let's talk about that group of names next time. mike wilson of morgan stanley, thank you very much. as always. things are changing this year. tom: all i can say is the separation in the equity market is no different than the economics we have been talking about this morning.

pick whichever one you like. jonathan: stock selection. netflix down hard. alphabet up. apple, the same thing. facebook this morning, 20%. they are huge moves. lisa: i keep thinking, there's a little bit of peloton and all of us, except perhaps not tom keene. at what point do these huge moves generate index level type of outflows? i do wonder if we overshoot to the downside, and that sort of cycle of washout has not happened yet. that is what it feels like. jonathan: there's no peloton in me either, just to be clear. tom: you talk about stock selection. i look at either as compared to merck -- at pfizer as compared to merck this morning. that is the kind of individual stock differential. granted, it is a pandemic, mrna and all of that, but this individual stock story is front and center. jonathan: if you want the pure play on mrna come up go to

moderna, and it is up even more. that had been the story of the last six to nine months. moderna really rolling over in the last six months. lisa: how much growth have we brought forward? there's a lack of a safety net as the fed removes accommodation , but the bank of england removes accommodation. how much does that factor into a choppy scenario that overshoot at some point? tom: that was depressing. we need to go with a bull to balance it out. jonathan: futures down 2% on the nasdaq. on the s&p, we are down 1%. facebook getting absolutely hammered. tom will tell you another stock that is up. tom: tiktok killing it. [laughter] jonathan: crude down 1.3%. christine lagarde has an interesting news conference coming up. ritika: with the first word

news, i'm ritika gupta. president biden says a raid by u.s. forces in syria has resulted in the lead of isis ian removed from the battlefield. he gave few other details other than to say that all americans returned safely from the operation. earlier, the pentagon said u.s. operations forces carried out a successful counterterrorism mission. the bank of england has raised its key interest rate as part of an attempt to contain inflation, on course to up 7%. five of the bank nine policymakers -- of the bank's nine policy makers supported an increase of 0.25%. four voted for an increase of 0.5%. british domestic energy bills will fall 54% in april, a dramatic blow to households already suffering from inflation. the u.k. energy regulator lifted its cap on bills in response to

surging gas prices. the government says it will offset energy price hikes for most families. all three of president biden's nominees to join the federal reserve say they place a high priority on tackling inflation. prices in the u.s. are rising at the fastest rate in almost 40 years. they appear before a senate confirmation hearing today. in prepared remarks, they call the fight against inflation the fed's most important task. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

jonathan: 12 minutes away from jobless claims in america, then on to the payrolls report. there is so much going on. futures down 1% on the s&p. four-day winning streak into thursday, -2.1%. the ecb news conference coming up shortly after jobless claims. we will head over to president lagarde in frank for it, germany -- in frankfurt, germany. just looking at cable. spike higher, dropped lower, 1.3

570 right now. i think that line from governor bailey about this not being an and evitable march higher just pushing back may be against this idea of rates going to much higher from here. may be the end point is lower. the end of the guild curve is still a little higher here to 1.1%. tom: it really speaks to the x axis, and i am going to do the same focus in 15 minutes. we will follow that press conference. i'm sorry, she's got to define the long march of transitory. jonathan: president lagarde has been calling it a hump. q&a is going to be interesting. tom: this is a joy. the day facebook went public, i have a wonderful conversation with david kirkpatrick. those are the kind of people "bloomberg surveillance" talks

to about this odd social media space. leadership there is brian wheeler -- brian wieser, on the trends we see in the advertising space across all of this. were you surprised by the meta failure, as dan ives says, the unmitigated disaster that is facebook? brian: i wasn't overly surprised. i think i am more surprised by the reaction that investors have. they are probably being very conservative. tom: from this purview, it seems that google, amazon, and the rest own the high ground. his traditional -- is traditional advertising, including facebook, dead?

brian: no. i think when we see amazon later today, the interest we see in retail media and related advertisement is through the roof right now, so not at all. lisa: do you think facebook relies too much on their advertising model at a time when they have a lot of competition? brian: absolutely they are an advertising company. as an advertising company, and the long run, it is a mid-single-digit growth business. the pandemic has probably helped them a lot. i think pushing into the metaverse that they were talking about party yesterday, probably a good diversification. lisa: can you parse through what

using is the overreaction to perhaps this existential crisis that people are looking at facebook and saying perhaps it is obsolete and tiktok is going to take over, and it is not going to remain anything close to what it has been and is right now, versus just a cyclical business that is growing and has to grow at a pace commensurate with the advertising industry? brian: what you said is the long term, ultimately. there is still a place where there's probably still a decent amount of growth to be had, but there's always a lot of issues. the way in which they identify whether or not there causing performances is a bit flawed. they tell you as much in the queue. there's a lot of their that i don't thick investors have properly understood. just this morning, vietnam and japan are no longer there. we don't even know what is going on.

jonathan: i know loads of people that have like the stock. i know very few people that like the company. is this just like a back a name now -- like a tobacco name now, and that is why people hold it? brian: it is not a bad characterization. i don't talk to investors as much as i used to, but i think that would be a fair sentiment. i think there are a lot of advertisers who believe that facebook contributes to the outcomes they want from media platforms, and that is why there is still such a large business for it. but i think your characterization is not wrong. jonathan: it has been too long. come back soon. for many people, the stock is a different conversation to the conversation on the company. on the company, it is almost toxic for some people. tom: i think you just nailed it.

the heritage of phillip morris and all of the international stuff, but i want to ask about is does he need to do a jack dorsey and get some one else into run the company, and zuckerberg takes sort of a chairman overview? i don't know. jonathan: he strikes me as a very different character. maybe i am wrong. by the way, we had this conversation back in 2014 about the growth. tom: who do you no one facebook? jonathan: i am not even on it. tom: mike mckee got off. jonathan: a ton of people still on instagram. lisa: basically, and then they move from tiktok, and the discord that they are on now, and soon it is going to be messaging through some thing else. how much is this a company becoming obsolete versus simply going the way of steady revenue. jonathan: don't you think that that is the hope people have,

that it colors the conversation a bit? that they want this company to go away? lisa: perhaps, although if you look at the demographics, they're really not getting that younger demographic in the door. how long can they last with just the bloomberg demographic? this st bloomberg -- the boomer demographic? how much is this become the aol of 2021? i will do some market research. jonathan: futures on the s&p down about 1%. on the nasdaq 100, down by 2%. we will head to frankfurt and catch up with president lagarde of the ecb. a news conference that could be interesting given what we heard from the fed, and given what the bank of england has the son that has done. euro-dollar, -0.2%. mike mckee has dropped into the studio because before go to the ecb and before go to frankfurt,

we will get some jobless claims in america as well. lisa: anything else? jonathan: just teeing us up for payrolls friday. [laughter] you haven't seen the nine a clock hour. i got a treat for you. lisa: we will be watching. jonathan: lots of stuff. from new york, this is bloomberg.

jonathan: president lagarde just stepping up to the podium in germany. before we start that ecb news conference let's have a mike mckee -- let's head over to mike mckee. how are you doing? michael: i am doing ok. at least i am employed. 238,000 jobless claims last week. down from the initial report of 260,000 last week and also lower than the 245 we were expecting. good news. the problem with jobless claims is they have been distorted by the omicron virus. if you are not paid for work, even if you are a waitress and you cannot go back to work because of the virus, you can file for unemployment benefits.

there is been a temporary bump but people do not think that is going to last. the other big number, productivity up 6.6%. it had fallen 5% -- 5% is the new revision. fourth-quarter productivity takes a huge jump higher, which pushes down on unit labor costs. unit labor costs were up 9.3% third-quarter, 0.3% in the fourth quarter. suggesting good news on the inflation front. jonathan: thank you. i believe the photographers have finished their work in frankfurt, germany. they crowd around christine lagarde. the news conference is about to begin. christine lagarde looks a little bit lonely when it comes to central bankers. the federal reserve does not think it is transitory, the bank of england does not think inflation is transitory. the ecb president does.

the bank of england hiking, the federal reserve is ready to go, the ecb seems to be putting that down the road. we can go over, germany as they hand over to president christine lagarde on the path forward for the european economy and monetary policy. pres. legarde: good afternoon. the vice president and i welcome you to our press conference. the euro area economy is continuing to recover and the labor market is improving further, helped by ample policy support. growth is likely to remain subdued in the first quarter as the current pandemic wave is still weighing on economic activity. shortages of materials, equipment, and labor continue to hold back output in some industries. high energy costs are hurting incomes, and are likely to dampen spending.

however, the economy is affected less and less by each wave of the pandemic, and the factors restraining production and consumption should gradually ease, allowing the economy to pick up again strongly in the course of the year. inflation has risen sharply in recent months. it has further surprise to the upside in january. this is primarily driven by higher energy costs that are pushing up prices across many sectors, as well as higher food prices. inflation is likely to remain elevated for longer than previously expected, but to decline in the course of this year. the governing council therefore confirmed the decisions taken as its monetary policy meeting last

december as detailed in the press release published at 1:45 today. accordingly, we will continue reducing the pace of our asset purchases step-by-step over the coming quarters and we will end debt purchases under the pandemic emergency purchase program at the end of march. in view of the current uncertainty, we need, more than ever, to maintain flexibility and optionality in the conduct of monetary policy. the governing council stands ready to adjust all of its it cements as appropriate to ensure that inflation stabilizes at its 2% target over the medium-term. i will now outline in more detail how we see the economy and inflation developing and

will then talk about our assessment of financial and monetary conditions. economic growth weekend to 0.3% in the final quarter of last year. nevertheless, output reached its pre-pandemic levels at the end of 2021. economic activity and demand will likely remain muted in the early part of this year for several reasons. first, containment measures are affecting consumer services, especially travel, tourism, hospitality, and entertainment. although infection rates are still high, the impact of the pandemic on economic life is not -- is now proving less damaging.

second, high energy costs are reducing the purchasing power of households in the earnings of businesses, which constrains consumption and investment. third, shortages of equipment, materials, and labor in some sectors continue to hamper the production of manufactured goods, delayed construction, and hold back the recovery in parts of the services sector. there are signs these bottlenecks may be starting to ease, but they will still persist for some time. looking beyond the near term, growth should rebound strongly over the course of 2022, driven by robust domestic demand. as the labor market is improving further, with more people having jobs and fewer in job retention

schemes, households should enjoy higher income and spend more. the global recovery and the ongoing fiscal and monetary policy report also contribute to this positive outlook. targeted and productivity enhancing fiscal measures as well as structural reforms tuned to the conditions in different euro area countries remain key to complement our monetary policy effectively. inflation. inflation increased to 5.1% in january from 5% in december 2021. it is likely to remain high in the near term. energy prices continued to be the main reason for the elevated rate of inflation.

the direct impact accounting for over half of headline nation in january. energy costs are also pushing up prices across many sectors. food prices have also increased, owing to seasonal factors, elevated transportation costs, and a higher price of fertilizers. in addition, price rises have become more widespread with the price of a large number of goods and services having increased markedly. most measures of underlying inflation have risen over recent months. although the role of temporary pandemic factors means the persistence of these increases remains uncertain. market-based indicators suggest moderation in energy price dynamics in the course of 2022

and price pressures stemming from global supply bottlenecks should also subside. labor market conditions are improving further, although wage growth remains muted overall. over time, the return of the economy to full capacity should support faster growth in wages. market-based measures of longer-term inflation expectations have remained broadly stable at rates just below 2% since our last monetary policy meeting. the latest survey-based measures stand at around 2%. these factors will also contribute further to underlying inflation and will help headline inflation to settle durably at our 2% target.

we continue to see the risks to the economic outlook as broadly balanced over the medium-term. the economy could perform more strongly than expected if households become more confident and save less than expected. by contrast, although uncertainty related to the pandemic have abated somewhat, geopolitical tensions have increased. furthermore, persistently high cost of energy could insert a stronger-than-expected drag on consumption and investment. the pace at which supply bottlenecks all resolved is a further risk to the outlook for growth and inflation. compared with our expectations in december, risks to the inflation outlook are tilted to the upside, particularly in the

near term. if price pressures feed through into higher than anticipated wage rises, or the economy returns more quickly to full capacity, inflation could turn out to be higher. market interest rates have increased since our december meeting. however, bank funding costs have so far remained contained. bank lending rates continue to stand at historically low levels , and financing conditions for the economy remain favorable. lending to firms has picked up, supported by short and longer-term loans. robust demand for mortgages is sustaining lending to households. banks are now as profitable as they were before the pandemic,

and their balance sheets remain solvent. according to our latest bank lending survey, loan demand by firms increased strongly in the last quarter of 2021. this was driven by both higher working capital needs stemming from supply bottlenecks, and increased financing of longer-term investment. in addition, banks continue to hold and lose the view of a -- risk of credit expense because of their positive assessment of the remic outlook. summing up, the european area economy continues to recover. growth is expected to remain subdued in the first quarter, while the outlook for inflation is uncertain. inflation is likely to remain elevated for longer than previously expected, but to

decline in the course of this year. we will remain attentive to the incoming data and carefully assess the implications for the medium-term inflation outlook. we stand ready to adjust all of our instruments as appropriate to make sure inflation stabilizes at its 2% target over the medium-term. we are now ready to take your questions. >> thank, president. the first question goes to cnbc. >> thanks a lot. thank you for taking my question. my first would be in light of the record inflation reading, how did this discussion go and the governing council.

the second goes the market pricing in two rate hikes for 2022. you have been saying that a rate hike this year is highly unlikely. what are you saying now? are you stiffing to highly unlikely or have you moved on? thank you. pres. legarde: thank you very much for these questions. very pertinent questions. concerning inflation. with the upside surprise we have seen, first in december, second in january, i can tell you there was unanimous concern around the table of the covering of about inflation numbers. obviously the impact it has on the near-term, the impact it has on our compatriots in europe. we know the burden is borne by those who are most vulnerable, most exposed come and who face day-to-day hardship of having to

put up with higher prices. i can assure you that concern was across the board and around the table in equal numbers. we had a very thorough and in-depth discussion about inflation precisely. we are focusing on latest information we have, but also the impact it will have on our medium-term outlook. that is clearly something that will be examined in more depth at the time of our march governing council meeting, when we produce more projections, which we have not on this outpatient -- on this occasion. when we can harness the latest data we have and also have more information about the job markets, about wages, and where

we can analyze and index what the impact is on our medium-term projections. we are all driven by the same mandate, which is price stability. we are all concerned to take the right steps at the right time. there is also concerned in california not to rush into decisions unless we have proper and thorough assessment based on data and the analytical work that will take place in the next few weeks. that is on your first point concerning the inflation numbers. on the other question of the rate hikes. i never make pledges without conditionality is. it is even more important at the

moment to be very attentive to that. as i said, we will assess very carefully. we will be data-dependent. we will do that work in march. i think you'll take us into the analysis of -- to determine what other drivers behind inflation in the short-term, what is behind inflation in the medium-term, and how the outlook and medium-term projections looks like. let's not forget that we will continue doing so on the basis of our forward guidance. that will continue to observe the sequence we have agreed, and it will be gradual in any determination we make on the right time at the basis of data. thank you.

>> the next question goes to eric albert. eric? >> thanks very much for taking my question. a couple of hours ago the bank of england increased its rate by .25%. four of the nine members of the committee wanted more than that, they wanted .5%. you're going to tell me that different economies means different decisions. good you tell me what is the difference between the 5.4% inflation in the u.k. and the 5.1% in the euro zone. the other question is about wage growth. what can you tell us about wage growth in the euro zone? you see any sign of that?

pres. legarde: it is interesting because your second question is almost the answer to your first question. i will go back a little bit into history. the united kingdom has had a history of much higher inflation than what we have had in the euro area. that is point number one. the critical difference now between our respective economies, the critical one has to do with the labor market, where clearly there is a lot at stake -- a lot of pressure on wages. there is scarcity of workers for jobs that are available, and i do not want to take a political stand, but there was a lot of on -- a lot of non-u.k. labor force

that eventually had to leave the united kingdom which has not been totally replaced. the georgia workers having a bearing on the labor market in the u.k. that is was causing the difference between the two. on the wage front, what we are seeing, and we can really celebrate, is that the euro area is at the lowest unemployment number it has ever been. 7% unemployed is a record number. the second aspect of the labor market is our participation of employees in the labor market is back to the level where it was pretty covid. on those two accounts we have good news to celebrate. what we are not yet seeing is a

significant movement in terms of wage increases and then -- and now we are not seeing a lot either expected -- that normally should be the next step that we see. we have lower unemployment, more people living the schemes under the which they were. operating -- the output gap closing gradually, an economy returning to full capacity. we should see movement and we are not seeing a lot of it yet. a lot of the information we are getting is backward looking. we are also very attentive to what is happening and what is likely to happen. that has taken into account in our projection numbers. barely what will happen in the next few weeks and what we can see, both for our march meeting

and later in our june meeting will be critically important to determine whether the three criteria of our forward guidance are fully satisfied. >> thank you. the next question goes to reuters. >> good afternoon. thanks for taking my question. the first one is that the guidance about standing ready to act to moves in either directions, i'm curious about the significance of that. in the interest rate guidance -- the two seem to be incoherent because that would be lower is an option and you're not ready to act in both directions and your own going south. clearly he not mean to say that. the second question is about the quality of your projection.

we retain confidence in the projections? the track record of the projections has been mixed and it seems to me the models are not equipped to be modeling a once-in-a-lifetime event. what you think about the projection going forward? pres. legarde: thank you very much for your questions. on your first point, you have done a good compare reading of the various paragraphs that are included in our monetary policy statement, and it is a fact we have removed the portion that says in both directions. we now say the governing council stands ready to adjust all of its instruments as appropriate to ensure inflation stabilizes at its 2% target. as appropriate, which we debated

within the governing council, captures the vast array of optionality we have available depending on the data we receive , and hopefully some of the uncertainty clears off. we thought that as appropriate was perfectly adequate to cover all of the moves and all of the optionality's that are available for us. it was inserted wants to indicate there was a change of tack, and that we were no longer in that low-inflation environment for such a long time. that was inserted in the december monetary policy statement. we are clearly receiving data

that informs us about the high level of inflation. certainly the upside risk to our projections, particular for the short-term, and that is the reason why we have thought that as appropriate we would cover all of the optionality's we have. i am glad you are asking me about the policy of the projections by staff. it is actually interesting because as managing director of the imf i did have exactly the same questions in due course in my previous life. what it means is that providing forecast, elaborating projections, is a difficult exercise based on the assumptions you make and the models you use. i have full confidence that staff does its best to include all of the sensible reasonable

rational assumptions they can come and i can assure you they go through an array of scenarios, what if, what if, what if, and they use. that many of you listening to me are also using. it is hardly surprising that most projectionists, most forecasters have also been surprised by the inflation numbers, in particular in december and january because very few people could have anticipated the energy shock that is heating our economies around the world, but particularly in europe, where we are so vastly export dependent when it comes to our energy. that was not anticipated because it was not in the assumptions. all the work that is done by staff to elaborate those

projections. all of that work is also assessed by the governing council, and each and every governor of each and every national central bank is consulting with their staff, and their staff is beating data into the aggregate projections that we produced one out of two every year. two out of four. the determination is made by the governing council. indeed there is an element of discretionary judgment. we do not take projections at face value. this is particularly relevant in the current circumstances given the level of uncertainty, given the geopolitical risks around, there has to be an element of judgment that belongs to the table of the governing council. thank you. >> the next question goes to

carolyn look of bloomberg. >> thanks a lot and good afternoon. i just wanted to draw on your response to the question on rate hikes earlier and wanted to confirm, are you not willing to repeat today, as you sit recently in december, that it is very unlikely you will raise interest rates this year? secondly, you are talking about how inflation risks are tilted to the upside in the short-term. if you give us more thoughts on the medium term and the assumption that inflation will fall below 2% at some point and stay there in 2023 and 2024. pres. legarde: on your first question about interest rate hikes, as i said, i do not like pledges without conditionality is, and i did make the statements at our last press

conference on the basis of the assessment, on the basis of the data we had, and it was conditional. what i am saying now is that, march, when we have additional data, when we have been able to integrate our analytical work the numbers that we have received in the last two days, we will be in a position to make a thorough assessment on the basis of data. i can only judge what that will be. we are a few weeks away from the closing time, at which we provide the analytical work, prepare the projections for the governing council, and then come with some recommendations and make our decisions.

it all goes back to how do we make our decisions? we make them on the basis of data. we make them on the basis of the forward guidance when it comes to interest rates. we make them gradually because we are not here to rock the boat. we will use all instruments and optionality's to respond to the situation, but the situation has tamed. it will of the notice to the monetary policy statement i just read, we refer to the upside risk to inflation in projections. situations having changed, we need to continue to monitor very carefully. we need to assess the situation on the basis of the data. then we will have to take a judgment. you had a second question which had to