back of strong output growth and revenue windfalls. it is now essential that the momentum of improving public finances is maintained and that the pace of fiscal consolidation accelerates in 2007 and 2008 so that all euro area countries attain their medium - term objective of a sound fiscal position as soon as possible. better than expected budgetary outcomes in 2006 and possible further revenue windfalls this year should be used for faster fiscal consolidation. experience has shown that the temptation to relax expenditure restraint, delay necessary reforms or pursue pro - cyclical policies in an upswing needs to be firmly resisted. fiscal consolidation measures have the best chance of success when they are based on a credible and comprehensive reform strategy, with a focus on reducing expenditure rather than increasing revenue ratios. the governing council stressed that progress in the area of structural reforms and moderate increases in labour costs in some countries have been key factors in increasing employment and reducing unemployment over the last few years. indeed, while still high at a rate of 7. 5 % in december 2006, the standardised unemployment rate was the lowest since the series began in 1993 and has fallen by 1. 4 percentage points since its latest peak in june 2004. to fully exploit the beneficial effects of economic and monetary union and the single market, further structural reforms must enhance the adjustment capacity of the euro area. this includes sufficient wage differentiation, especially to improve employment opportunities for less skilled workers and in regions with high unemployment. it also encompasses more flexible product and labour markets that would give rise to new investment possibilities and innovation. and it requires the removal of impediments to labour mobility – between jobs, between regions and across borders. let me therefore recall that with slovenia having entered the euro area, its labour force needs to be granted full access to the labour markets of all euro area countries. generally, structural reforms, in combination with fiscal consolidation, must support sustainable developments by limiting the burden that is shifted to younger and future generations. considerable challenges therefore remain, which differ across countries but which all urgently require determined action. we are now at your disposal for questions.

has been halted or even reversed. the ongoing robust expansion of money and credit reflects the still accommodative monetary policy stance and the strengthening of economic activity in the euro area. at 10. 7 %, the annual growth rate of loans to the private sector remained strong in december, although showing a slight moderation with respect to the previous month. strong growth in private sector credit reflects the continuation of the upward trend in the growth of borrowing by non - financial corporations seen since mid - 2004. meanwhile, in the context of rising mortgage rates throughout the euro area and slowing housing markets in some regions, the growth of household borrowing has shown some further signs of moderation in recent months, albeit remaining at still very high rates. taking the appropriate medium to longer - term perspective for assessing trends in money and credit growth, the latest developments confirm the continuation of a persistent upward trend in the underlying rate of monetary expansion. following several years of robust monetary growth, the liquidity situation in the euro area is ample by all plausible measures. persistent strong monetary and credit growth in an environment of ample liquidity point to upside risks to price stability over the medium to longer term. monetary developments therefore continue to require very careful monitoring, particularly against the background of a solid expansion in economic activity and continued strong property market developments in many parts of the euro area. to sum up, in assessing price trends it is particularly important to look through any short - term volatility. on the basis of today ’ s assessment, after a possible fall over the spring and summer, inflation rates are likely to increase again later in the year. risks to the medium - term outlook for price stability remain on the upside, relating in particular to stronger than currently expected wage developments. given the very strong monetary and credit growth in an environment of already ample liquidity, a cross - check of the outcome of the economic analysis with that of the monetary analysis supports the assessment that upside risks to price stability prevail over the medium to longer term. hence, we will be strongly vigilant in order to ensure that risks to price stability over the medium term do not materialise. this will support the solid anchoring of medium to longer - term inflation expectations in the euro area at levels consistent with price stability. therefore, looking ahead, acting in a firm and timely manner to ensure price stability in the medium term remains warranted. as regards fiscal policy, first indications confirm that fiscal developments in the euro area were relatively favourable in 2006 on the