Underlying price pressures are expected to increase somewhat  Page 7 sur 9 this year, owing to short-term supply constraints and the recovery in domestic demand, although they remain subdued overall, in part reflecting low wage pressures. This assessment is broadly reflected in the baseline scenario of last March ECB staff projections for the Euro Area. It foresees annual inflation at 1.4% in 2023. There is today in the Euro Area no risk of lasting return of inflation. We will continue PEPP net asset purchases “until at least the end of March 2022 and, in any case, until [we] judge that the coronavirus crisis phase is over”. We still have ample time to judge and decide, well beyond our June meeting, as Christine Lagarde said last Friday. Let me today stress one obvious but sometimes overlooked truth: whatever the future decision on PEPP, we will still be able to play and enhance the full “quartet” of our unconventional instruments: asset purchases, negative rates, liquidity provision, and forward guidance. These unconventional instruments are here to stay, beyond Covid and its crisis tools, meaning that our monetary policy can remain as accommodative as necessary, for as long as necessary. And I would like to share some thoughts on each instrument of the quartet. Asset purchases are powerful and we still have room to do more if necessary. Reinvestments under the PEPP will remain significant, and net purchases will continue under the APP, possibly adapted.
Examples are inadequate supply of land, excessive tax burden on housing and construction, and inefficient urban planning and approval procedures that delay market responses to the rising demand for housing. Over-rapid liberalization of supply constraints were also one reason for the emergence of excess supply. •  Fourth, the high global liquidity that appeared has improved access to funds, which resulted in excessive exuberance on asset price inflation. The Impact on Hong Kong 26. Amidst the recent attacks to the regional currency markets, no economy in Asia has been totally immune, not least Hong Kong, despite the strong fundamentals. 27. If we identify the real issues in Asia as one of structural competitiveness in the global economy, caused by shifts in global resources and rising productivity outside the region, then structural adjustment must come through changes in either the internal price or the external price. With a fixed exchange rate regime and therefore a fixed external price, such as in Hong Kong, the adjustment comes through changes in the internal prices, especially the asset markets. In those economies with floating exchange rates, there may be adjustment in both the internal and external prices. This is exactly what is happening right now. Using the US dollar still as the benchmark currency, it is very interesting to see that since the beginning of the year, the Hang Seng Index has declined by 26% as of last Friday, Singapore Strait Times Index by 32%, the Nikkei 225 by 28% and the other ASEAN indices by between 50-60%.