jean - claude trichet : hearing at the committee on economic and monetary affairs of the european parliament introductory statement by mr jean - claude trichet, president of the european central bank, at a hearing at the committee on economic and monetary affairs of the european parliament, brussels, 29 august 2011. * * * dear madam chair, dear honourable members, thank you very much for the invitation to the exchange of views today. you asked me to begin with a brief overview of the main recent economic and monetary developments in the euro area and recent monetary policy decisions. i. economic and monetary developments incoming information since our last regular hearing in june continue to point towards ongoing growth in the euro area, although – as expected – at a slower pace. after a strong increase of 0. 8 % quarter - on - quarter in the first quarter of 2011, partly due to special factors, real gdp growth decelerated to 0. 2 % quarter - on - quarter in the second quarter. looking ahead, we continue to see the euro area economy growing at a modest pace in a context of overall relatively sound economic fundamentals for the euro area as a whole. at the same time, not least because of the recently re - emerged tensions in financial markets, uncertainty remains particularly high. this mainly relates to ongoing fiscal and economic adjustment in a number of euro area countries and most other advanced economies, as well as the overall outlook for the global economy. in particular, the united states has been facing both fiscal and structural headwinds amidst weakened economic prospects. inflation in the euro area has remained elevated for some months, mainly driven by commodity prices. we expect to see inflation still above 2 % over the months ahead. risks to the medium - term outlook for price developments are under study in the context of the ecb staff projections that will be released early september. our monetary analysis indicates that the underlying pace of monetary expansion remains moderate but monetary liquidity remains ample, with the potential to accommodate price pressures. at the same time, monetary liquidity is likely to be held more for precautionary reasons rather than for spending purposes. the governing council of the ecb is determined to ensure that inflation expectations continue to be firmly anchored in line with our aim of keeping inflation rates below, but close to, 2 % over the medium term. ii. recent measures taken in response to the intensification of the crisis early august let me turn to our response to the deterioration in financial markets in the second half of july and early august

catching - up process, both in europe as a whole and on a global level, as we cannot afford the persistence or even widening of the existing gaps between poor and rich countries. moreover, a balanced and consistent policy - mix will be of crucial importance also for the transition countries in their catching - up and integration efforts. in that respect, i am glad that this conference provides an excellent opportunity to review the policy challenges the transition economies face in the most important fields of economic policy. … let me briefly touch these fields, which range from microeconomic reforms over macroeconomic policies to integration policies. firstly, structural reforms are the key to long - term success. existing productive capacities have to be reshaped, and new ones have to be built, above all in the service sector. in particular, financial services, which were practically non - existent when transition started a decade ago, have to be strengthened further. developing structures and institutions of financial intermediation is the prerequisite for ensuring the high level of productive real investment necessary for high real gdp growth. more broadly, structural convergence is a conditio sine qua non for successful transition and it is an indispensable basis for sustainable macroeconomic stability. secondly, in the field of macroeconomic policies, i would like to underline the importance of formulating and implementing stability - oriented, sustainable and consistent fiscal and monetary policies. to keep the accession process manageable even now that the union is negotiating with a comparatively large number of countries, it will be essential to key the pace of negotiations as objectively as possible to the further progress of the candidate countries toward fulfilling the conditions for eu membership. this involves two aspects : first, the speed of enlargement must not compromise its quality, and second, differences between the countries in the two former groups of candidates must be taken into consideration if there is a factual reason to do so. an overly ambitious approach which is not adequately underpinned by developments in the real economy may lead to losses in credibility or even turn out to be counterproductive to stability and to the long - term catching - up process. from my point of view, it is clear that adequately designed stability - oriented policies facilitate structural change. in that way, prudent efforts towards stabilization and structural change can reinforce each other and will foster the catching - up process. … turning to monetary policy, i am convinced that a sound stance and conduct can best be achieved if the central bank is fully independent. central bank