an historical average of 74 %. employment growth has recently strengthened as well in all the main sectors, namely in industry, construction and market services. these developments bode well for economic growth, as expansions tend to be stronger and more resilient when growth is broad - based. the number of people employed in the euro area has also increased by around 7. 5 million since 1 / 5 bis central bankers'speeches hitting a low in mid - 2013. employment has now reached its highest level since the introduction of the euro. the unemployment rate continues to decline and now stands at close to a nine - year low of 8. 7 %, down by 3. 3 percentage points from its highest level. as more people find jobs, household incomes rise. this has helped to strengthen private consumption growth, which in turn is boosting business investment. in addition, a number of other factors have supported investment. these factors include higher demand for euro area exports, rising corporate profitability and an increasing use of installed productive capacity. these positive developments have been fostered and reinforced by the pass - through of the ecb ’ s monetary policy measures, which have eased funding conditions for households and firms. small and medium - sized enterprises ( smes ) in particular have benefited from our policy measures. the growing inclusiveness of this economic expansion is partly due to the renewed vigour of small businesses, which are a key engine of income creation in our economy. while our confidence that inflation will converge towards our aim of below, but close to, 2 % has strengthened, we cannot yet declare victory on this front. after increasing to 2 % in early 2017 due to a rise in energy prices, headline inflation has fluctuated since may 2017 between 1. 3 % and 1. 5 %. measures of underlying inflation, which exclude the most volatile components, remained subdued and have yet to show convincing signs of a sustained upward trend. also, new headwinds have arisen from the recent volatility in the exchange rate, whose implications for the medium - term outlook for price stability require close monitoring. on the back of improved economic conditions, the financial stability situation in the euro area has also continued to evolve positively. as i will explain in more detail, for the time being we have little indication that generalised imbalances are emerging. overall, while we can be more confident about the path of inflation, patience and persistence with regard to monetary policy is still warranted for underlying inflation pressures to build up and

and monetary policy – surely one of the most widely - accepted principles in modern macroeconomic thinking – the only feasible objective for monetary see tinbergen ( 1952 ) and theil ( 1961 ). policy is to control the price level, since ultimately it is impotent with respect to the level of real income or employment. 2 second, the central bank must be credible in its commitment to deliver this objective. private longer - term inflation expectations must be securely anchored at levels consistent with price stability. 3 to achieve this, the central bank must always be ready – and be seen to be ready – to take whatever action is necessary to deliver price stability. making this commitment credible requires, in turn, that the central bank operates under the appropriate institutional set - up and that it develops, over time, a track record demonstrating its willingness and capacity to act so as to maintain price stability. third, the central bank must be independent of political influence. a large body of theoretical and empirical literature has established that central bank independence is conducive to maintaining price stability. 4 given the many short - term pressures they face to deviate from the objective of price stability, the involvement of politicians in monetary policy only serves to undermine its credibility and thereby its effectiveness. fourth, so as to maintain its legitimacy, an institution endowed with independence to pursue a specific public objective must act in a transparent manner. transparency and accountability also buttress the credibility of the central bank ’ s commitment to price stability, by ensuring that the public understand that the motivation behind monetary policy decisions is the achievement of the primary objective. fifth, monetary policy must maintain a medium - term orientation. the long and variable lags that characterise the monetary policy transmission process make it impossible for monetary policy to offset the inevitable unanticipated shocks that buffet the economy and the price level in the short - run. attempts to “ fine tune ” inflation developments on a month - to - month basis are doomed to fail and would only introduce additional unnecessary volatility into the economy. sixth, monetary policy must be underpinned by a comprehensive analytical framework, which ensures that all information needed to take monetary policy decisions is available to policy makers in a form that supports efficient and timely decision - making. given the importance to maintaining credibility and a medium - term orientation, such a framework must include a thorough analysis of monetary and credit developments, reflecting the necessarily monetary nature of inflation over the longer term. finally, a clear distinction must be maintained between : on the