MONETARY POLICY
17 April 2025
Our monetary policy statement at a glance
What are the main points in our new monetary policy statement and what mattered to us in our decision? Our visual statement explains this in short and easy-to-understand language.
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PUBLICATION
14 April 2025
Firms signal lower interest rates on loans
In the first quarter of 2025 firms reported declining bank interest rates on loans and a slight further tightening of other lending conditions. Selling price expectations were stable, wage expectations moderated and inflation expectations were unchanged over the longer horizon.
Read the Survey on the Access to Finance of Enterprises
PODCAST
17 April 2025
Tune in to our latest decisions
Our Governing Council decided on monetary policy, determining what’s needed to return inflation to our 2% target in a timely manner. Listen to this episode where President Christine Lagarde presents the decisions during our press conference.
The ECB Podcast- 17 April 2025
- MONETARY POLICY DECISIONEnglishOTHER LANGUAGES (23) +Related
- 17 April 2025
- COMBINED MONETARY POLICY DECISIONS AND STATEMENT
- 16 April 2025
- BALANCE OF PAYMENTS (MONTHLY)
- 15 April 2025
- WEEKLY FINANCIAL STATEMENTEnglishOTHER LANGUAGES (22) +Annexes
- 15 April 2025
- WEEKLY FINANCIAL STATEMENT - COMMENTARY
- 15 April 2025
- PRESS RELEASERelated
- 15 April 2025
- EURO AREA BANK LENDING SURVEY
- 14 April 2025
- PRESS RELEASE
- 17 April 2025
- Christine Lagarde, President of the ECB, Luis de Guindos, Vice-President of the ECB, Frankfurt am Main, 17 April 2025EnglishOTHER LANGUAGES (23) +Related
- 17 April 2025
- 8 April 2025
- Introductory statement by Piero Cipollone, Member of the Executive Board of the ECB, at the Committee on Economic and Monetary Affairs of the European ParliamentEnglishOTHER LANGUAGES (17) +
- 7 April 2025
- Slides by Piero Cipollone, Member of the Executive Board of the ECB, at the conference "The interplay between tax and financial regulations in a new digital environment" organised by the Banca d'Italia, the Institute for Austrian and International Tax Law and the Vienna University of Economics and Business in Rome, Italy
- 5 April 2025
- Presentation by Isabel Schnabel, Member of the Executive Board of the ECB, at the European House Ambrosetti’s 36th Workshop on Economy and Finance, Italy
- 3 April 2025
- Speech by Luis de Guindos, Vice-President of the ECB, at the International Federation of Accountants’ Chief Executives Forum
- 24 March 2025
- Interview with Piero Cipollone, Member of the Executive Board of the ECB, conducted by Andrés Stumpf
- 16 March 2025
- Interview with Luis de Guindos, Vice-President of the ECB, conducted by Jon Ihle
- 7 March 2025
- Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Patricia Hecht and Beate Willms on 5 February 2025
- 28 February 2025
- Contribution to Bancaria by Piero Cipollone, Member of the Executive Board of the ECB, based on remarks at the Crypto Asset Lab Conference on 17 January 2025
- 20 February 2025
- Interview with Frank Elderson, conducted by NVDE
- 7 April 2025
- Military and diplomatic conflicts harm economic growth. This ECB blog shows that the expected length of wars matters for how strongly they weigh on consumer sentiment.Details
- JEL Code
- D10 : Microeconomics→Household Behavior and Family Economics→General
D84 : Microeconomics→Information, Knowledge, and Uncertainty→Expectations, Speculations
- 4 April 2025
- Institutional investors are increasingly active in housing markets across Europe. The ECB blog examines implications for house price growth and the transmission of monetary policy.Details
- JEL Code
- R21 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Household Analysis→Housing Demand
R31 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Real Estate Markets, Spatial Production Analysis, and Firm Location→Housing Supply and Markets
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
- 28 March 2025
- We constantly hear of exciting new ways AI tools can help to tackle economic problems and the productivity gains they bring. However, benefits can only materialize when firms actually use AI.
- 25 March 2025
- AI adoption requires enormous amounts of electricity. And so does greening the economy. Are the digital and green transitions clashing or can they be successfully achieved together? The ECB Blog takes a closer look.Details
- JEL Code
- O10 : Economic Development, Technological Change, and Growth→Economic Development→General
Q20 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Renewable Resources and Conservation→General
- 21 March 2025
- AI is already part of many workers’ daily routines. Some fear losing their jobs, but most don’t. The ECB Blog looks at how workers are using AI tools, how they feel about it and what that means for work in the future.Details
- JEL Code
- O14 : Economic Development, Technological Change, and Growth→Economic Development→Industrialization, Manufacturing and Service Industries, Choice of Technology
J60 : Labor and Demographic Economics→Mobility, Unemployment, Vacancies, and Immigrant Workers→General
- 15 April 2025
- EURO AREA BANK LENDING SURVEYAnnexes
- 15 April 2025
- EURO AREA BANK LENDING SURVEY - ANNEX
Related- 15 April 2025
- PRESS RELEASE
- 14 April 2025
- SURVEY ON THE ACCESS TO FINANCE OF ENTERPRISES IN THE EURO AREAAnnexes
- 14 April 2025
- SAFE QUESTIONNAIRE
- 9 April 2025
- WORKING PAPER SERIES - No. 3049Details
- Abstract
- This paper investigates the impact of reforms altering legal central bank independence (CBI) on monetary policy discipline and credibility, two key mechanisms shaping price stability. Using a sample of 155 countries over more than 50 years (1972–2023), we show that reforms improving CBI strengthen monetary discipline and the credibility of central banks. Larger reforms enhance monetary discipline with a lag, achieving their full effect after ten years. Central bank reforms have a greater impact on monetary discipline in countries that have not reversed earlier reforms. CBI reforms have the strongest impact in democratic countries, countries with flexible exchange rates, and those without a monetary policy strategy. The effects of CBI on monetary discipline and credibility are amplified when public debt-to-GDP ratios are high. These findings underscore the crucial role of CBI as a key factor influencing price stability and highlight the risks associated with weakening institutional autonomy.
- 9 April 2025
- LETTERS TO MEPSRelated
- 9 April 2025
- DIGITAL EURO PREPARATION PHASE - SCHEME RULEBOOK DEVELOPMENT GROUP DOCUMENTS
- 9 April 2025
- MIP NEWS
- 2 April 2025
- WORKING PAPER SERIES - No. 3048Details
- Abstract
- We study how short-term interest rate volatility affects the transmission of monetary policy. To identify exogenous changes in volatility, we exploit the pronounced heteroskedasticity visible in the time-series of euro area short-term rates over the past two and a half decades. Interacting the exogenous variation in volatility with high-frequency-identified monetary policy shocks, we find that increases in volatility dampen the effects of monetary policy on output and prices. This dampening effect is visible already at the earlier stages of transmission, including in the pricing and volume of bank lending.
- JEL Code
- E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
- 1 April 2025
- WORKING PAPER SERIES - No. 3047Details
- Abstract
- Word embeddings are vectors of real numbers associated with words, designed to capture semantic and syntactic similarity between the words in a corpus of text. We estimate the word embeddings of the European Central Bank’s introductory statements at monetary policy press conferences by using a simple natural language processing model (Word2Vec), only based on the information and model parameters available as of each press conference. We show that a measure based on such embeddings contributes to improve core inflation forecasts multiple quarters ahead. Other common textual analysis techniques, such as dictionary-based metrics or sentiment metrics do not obtain the same results. The information contained in the embeddings remains valuable for out-of-sample forecasting even after controlling for the central bank inflation forecasts, which are an important input for the introductory statements.
- JEL Code
- E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E37 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Forecasting and Simulation: Models and Applications
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
- 1 April 2025
- MACROPRUDENTIAL BULLETIN - ARTICLE - No. 28Details
- Abstract
- This article explores the link between geopolitical risk and bank solvency and discusses the potential implications for macroprudential policy. Drawing on 120 years of data, analysis reveals that heightened geopolitical risk has been associated with lower bank capitalisation over the past century. This effect can arise through multiple economic and financial channels, including reduced economic activity, surging inflation, increased sovereign risk, and shifts in capital flows and asset prices. However, the analysis also finds that the impact of geopolitical risk on bank solvency has been non-linear, with major geopolitical risk events having a much stronger effect than less major or more localised geopolitical shocks, with the effect being heterogenous across countries. Macroprudential policy and microprudential supervision play important and complementary roles in ensuring that banks are sufficiently prepared to absorb potential geopolitical shocks. While microprudential supervision ensures that geopolitical risk is factored into capital and liquidity planning, macroprudential capital buffer requirements can be released when shocks materialise, thereby supporting banks in absorbing losses while maintaining the provision of key financial services to the real economy.
- JEL Code
- G2 : Financial Economics→Financial Institutions and Services
G15 : Financial Economics→General Financial Markets→International Financial Markets
F51 : International Economics→International Relations, National Security, and International Political Economy→International Conflicts, Negotiations, Sanctions
- 31 March 2025
- WORKING PAPER SERIES - No. 3046Details
- Abstract
- This paper investigates the role of firms in the transmission of monetary policy to individual labor market outcomes, both the intensive and extensive margins. Using German matched employer-employee administrative data, we study the effects of monetary policy shocks on individual employment and labor income conditioning on the firm characteristics. First, we find that the employment of workers in young firms are especially sensitive to monetary policy shocks. Second, wages of workers in large firms react relatively more, with some pronounced asymmetries: differences between large and small firms are more evident during monetary policy easing. The differential wage response is driven by above-median workers and cannot be fully explained by a worker component. Notably, larger firms adjust wages more significantly despite experiencing similar changes in investment and turnover compared to smaller firms. Furthermore, monetary policy tightening disproportionately impacts low-skilled and low-wage earners, while easings amplify inequality due to substantial wage increases for top earners. Overall, the effect of monetary policy on inequalities is however larger in easing periods – driven by a large increase in wages for top earners.
- JEL Code
- E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
- 31 March 2025
- WORKING PAPER SERIES - No. 3045Details
- Abstract
- This paper investigates the impact of regional institutional quality on economic growth and economic resilience. Using data collected by the Quality of Government Institute, we conduct a two-way fixed effect panel regression model for around 200 European regions during the period 2010 to 2021. Our findings establish a positive relationship between institutional quality and medium-term GDP growth. This effect is more pronounced in regions with low-income per capita, highlighting the importance of asymmetries across European regions. A convergence of regions with low institutional quality to the EU median would increase annual GDP per capita growth by 0.5 percentage points over the medium-term. Additionally, regions with high quality institutions are more resilient to adverse shocks and have a lower incidence of crisis. Our results suggest that regional institutional reforms, such as increasing public sector efficiency or reducing corruption, would spur growth, resilience, and convergence in the European economy.
- JEL Code
- O43 : Economic Development, Technological Change, and Growth→Economic Growth and Aggregate Productivity→Institutions and Growth
E02 : Macroeconomics and Monetary Economics→General→Institutions and the Macroeconomy
R11 : Urban, Rural, Regional, Real Estate, and Transportation Economics→General Regional Economics→Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
R50 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Regional Government Analysis→General
C23 : Mathematical and Quantitative Methods→Single Equation Models, Single Variables→Panel Data Models, Spatio-temporal Models
- 31 March 2025
- SURVEY OF MONETARY ANALYSTS
- 26 March 2025
- WORKING PAPER SERIES - No. 3044Details
- Abstract
- This paper analyzes the private production of safe assets and its implications forfinancial stability. Financial intermediaries (FIs) originate loans, exert hidden effort toimprove loan quality, and create safe assets by issuing debt backed by the safe paymentsfrom (i) their own loans and (ii) a diversified pool of loans from all intermediaries. Ishow that the interaction between effort and diversification decisions determines theaggregate level of safe assets produced by FIs. In the context of incomplete markets, Iidentify a free-rider problem: individual FIs fail to internalize how their effort influencesthe ability to generate safe assets through diversification, since the latter depends onthe collective effort of all FIs. This market failure generates a novel inefficiency, thatworsens as the scarcity of safe assets increases. The public provision of safe assetshelps mitigate this inefficiency by reducing their scarcity, but it cannot fully resolve it.Moreover, the impact on the total private supply of safe assets is ambiguous: public safeassets reduce incentives for diversification (crowding-out effect), which in turn increasesFIs’ incentives to exert effort (the crowding-in effect).
- JEL Code
- G20 : Financial Economics→Financial Institutions and Services→General
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
- 26 March 2025
- WORKING PAPER SERIES - No. 3043Details
- Abstract
- We investigate the interaction between monetary and macroprudential policy in affecting banks’ lending and risk-taking behaviour using rich euro area credit registry data and exploiting a unique setting that combined a sharp and unexpected monetary tightening with a wave of macroprudential tightening initiated before. While, for the average bank, required capital buffer increases did not significantly reduce lending additionally during the monetary tightening, for those banks that became capital-constrained lending fell by about 1.3-1.8 percentage points more for existing credit relationships and new bank-firm relationships were 2.5-4.4 percentage points less likely to be established, both relative to better-capitalized banks. In addition, such banks were more reluctant to pass higher policy interest rates on to their borrowers and took fewer risks, with a greater reduction in the LTV ratio for newly originated loans, and less reliance on risky assets, such as commercial real estate, as collateral. Our analysis shows that when calibrating monetary and macroprudential policies, it is crucial to account for the effects of policy interactions and the role of bank heterogeneity.
- JEL Code
- E5 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit
E51 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Money Supply, Credit, Money Multipliers
G18 : Financial Economics→General Financial Markets→Government Policy and Regulation
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
- 26 March 2025
- RESEARCH BULLETIN - No. 129Details
- Abstract
- This article investigates how firms transmit monetary policy shocks to individual labour market outcomes at both the intensive and extensive margins. Using matched employer-employee administrative data from Germany, we study the effects of monetary policy shocks on individual employment and of labour income conditioning on characteristics of workers and firms. First, we find that the employment of workers at young firms is especially sensitive to monetary policy shocks. Second, wages of workers at large firms react more than those at small firms, with some pronounced asymmetries – differences between large and small firms are more evident during monetary policy easing. The differential wage response is driven by workers earning above-median wages and cannot be fully explained by a worker component. Notably, larger firms adjust wages more significantly despite experiencing similar changes in investment and turnover compared to smaller firms.
- JEL Code
- E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
F41 : International Economics→Macroeconomic Aspects of International Trade and Finance→Open Economy Macroeconomics
Q43 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Energy→Energy and the Macroeconomy
- 25 March 2025
- WORKING PAPER SERIES - No. 3042Details
- Abstract
- Do sovereign credit ratings take into account physical and transition climate risks? This paper empirically addresses this question using a panel dataset that includes a large sample of countries over two decades. The analysis reveals that higher temperature anomalies and more frequent natural disasters—key indicators of physical risk—are associated with lower credit ratings. In contrast, transition risk factors do not appear to be systematically integrated into credit ratings throughout the entire sample period. However, following the Paris Agreement, countries with greater exposure to natural disasters received comparatively lower ratings, suggesting that credit rating agencies are increasingly recognizing the significance of physical risk for sovereign balance sheets. Additionally, more ambitious CO2 emission reduction targets and actual reductions in CO2 emission intensities are associated with higher ratings post-Paris Agreement, indicating that credit rating agencies are beginning to pay more attention to transition risk. At the same time, countries with high levels of debt and those heavily reliant on fossil fuel revenues tend to receive lower ratings after the Paris Agreement. Conversely, sovereigns that stand to gain from the green transition—through revenues from transition-critical materials—are assigned higher sovereign ratings after 2015.
- JEL Code
- G15 : Financial Economics→General Financial Markets→International Financial Markets
G24 : Financial Economics→Financial Institutions and Services→Investment Banking, Venture Capital, Brokerage, Ratings and Ratings Agencies
F3 : International Economics→International Finance
F64 : International Economics→Economic Impacts of Globalization→Environment
H64 : Public Economics→National Budget, Deficit, and Debt
- 24 March 2025
- WORKING PAPER SERIES - No. 3041Details
- Abstract
- We examine whether loan portfolio sectoral specialization provides informational advantages to banks, enabling better credit risk assessment. Using euro area credit register data, we compare probabilities of default assigned by specialized and non-specialized banks to the same borrowing firm several quarters before the borrower defaults. We find that banks specialized in the borrower’s sector are better in predicting future defaults. This is mostly driven by specialized banks actively raising probabilities of default earlier, not by higher probabilities of default when loans are issued. As a result, specialized banks also increase provisions to these borrowers. We do not observe differences in credit risk assessment towards healthy borrowers, suggesting that the effect is not attributable to general conservatism but to more accurate evaluation of credit risk in the sectors of banks’ specialization. Our results are more pronounced for smaller firms and when banks do not have long-term relationships with their defaulting borrowers.
- JEL Code
- G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G32 : Financial Economics→Corporate Finance and Governance→Financing Policy, Financial Risk and Risk Management, Capital and Ownership Structure, Value of Firms, Goodwill
D82 : Microeconomics→Information, Knowledge, and Uncertainty→Asymmetric and Private Information, Mechanism Design
- 24 March 2025
- STATISTICS PAPER SERIES - No. 50Details
- Abstract
- This paper presents the estimation method used to break down the euro area portfolio investment liabilities in the international investment position (i.i.p.) and their corresponding income debits in the balance of payments (b.o.p.), by main geographical counterpart. Identifying non-resident investors in euro area portfolio investment liabilities (i.e. equity and debt securities issued by euro area residents) is a complex task, as securities are regularly traded in secondary markets and held via custodians and other financial intermediaries. Consequently, identifying the actual holders of euro area securities may be hampered by so-called “first-known counterparty” and/or “custodial” biases if statisticians cannot look through the chain of intermediaries. Owing to these difficulties, the geographical counterpart allocation of euro area portfolio investment liabilities cannot generally be directly collected from reporting agents (i.e. the issuers of euro area securities) but instead needs to be estimated. The estimation method presented in this document relies on a comprehensive set of so-called “mirror” datasets (i.e. information on the holders of euro area securities) supported by temporal disaggregation and econometric techniques. The results provide robust estimates of portfolio investment liabilities and income debits by geographical counterpart.
- JEL Code
- C22 : Mathematical and Quantitative Methods→Single Equation Models, Single Variables→Time-Series Models, Dynamic Quantile Regressions, Dynamic Treatment Effect Models &bull Diffusion Processes
C82 : Mathematical and Quantitative Methods→Data Collection and Data Estimation Methodology, Computer Programs→Methodology for Collecting, Estimating, and Organizing Macroeconomic Data, Data Access
- 20 March 2025
- ECONOMIC BULLETIN
- 20 March 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 2, 2025Details
- Abstract
- This box describes the Eurosystem liquidity conditions and monetary policy operations in the seventh and eighth reserve maintenance periods of 2024, from 23 October 2024 to 4 February 2025.
- JEL Code
- E40 : Macroeconomics and Monetary Economics→Money and Interest Rates→General
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
- 20 March 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 2, 2025Details
- Abstract
- This box examines euro area credit conditions from the perspective of banks and firms. The analysis uses data from the bank lending survey and the survey on the access to finance of enterprises. By offering qualitative insights into credit supply and demand, these surveys complement hard data in analysing how monetary policy is transmitted to firms through banks. The respective survey findings confirm that the general economic outlook and firm-specific conditions are significant factors affecting credit standards and the availability of bank loans. Although the surveys evaluate bank loan demand from different angles, both surveys indicate subdued demand developments in 2024. Furthermore, the latest data for both surveys, covering the fourth quarter of 2024, signal persistently weak loan demand, despite declining interest rates, and a renewed tightening of bank credit supply to firms in the euro area.
- JEL Code
- E4 : Macroeconomics and Monetary Economics→Money and Interest Rates
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
E5 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit
E51 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Money Supply, Credit, Money Multipliers
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G30 : Financial Economics→Corporate Finance and Governance→General
- 20 March 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 2, 2025Details
- Abstract
- Historically, stronger dynamics in services prices than in non-energy industrial goods (NEIG) prices have led to a persistent positive gap between services and NEIG inflation rates. However, the relative price of goods versus services rose rapidly in 2021-2022 before subsequently falling back. This box reviews this episode and examines whether the pre-pandemic trend in this relative price development provides a good benchmark for future developments, also taking into account the potential impact of structural factors related to deglobalisation, digitalisation, demographic trends and climate change.
- JEL Code
- E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
Interest rates
| Deposit facility | 2.25 % |
| Main refinancing operations (fixed rate) | 2.40 % |
| Marginal lending facility | 2.65 % |
Inflation rate
More on inflationExchange rates
| USD | US dollar | 1.1360 | |
| JPY | Japanese yen | 161.98 | |
| GBP | Pound sterling | 0.85873 | |
| CHF | Swiss franc | 0.9291 |
Financial stability
Our tasks Institutional framework Financial Stability Review Macroprudential policy measuresMarket operations
Open market operations Asset purchase programmes Lendings of holdings under PSPPNOT AN EXPERT? CHECK OUT OUR EXPLAINERS
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