, international food prices have acted to push down on inflation but given recent rises in world market prices they could be a source of inflationary pressure going forward. but then there is still 28 % which we attribute to domestic demand. and the higher inflation was not just in food. annual non - food inflation went from 3. 6 % in june 2006 to 4. 3 % by august of this year. the average of the three core inflation indicators used by the banco de la republica increased from 3. 7 % to 4. 9 % during the same period. the behavior of a series called “ non - tradable goods excluding food and regulated prices ” is particularly worth noting, with an annual price increase of 4. 8 % at december 2006 and 5. 6 % at present, including a major build - up in the months of july and august. all of this suggests that while the special food price factors were important, there was also an underlying demand - push pressure on consumer prices. inflation expectations for the short - term exceeded the target range. this too was important. if left to rise further, they could have fed the inflationary process and be reflected in wage negotiations, in company pricing policies, and in decision - making on financial markets. if not dealt with early on, high inflation would build up and force a more costly adjustment later on. iii. the orientation of monetary policy before i go on to interpret this data and to explain how we responded, let me remind you of the objective of monetary policy in colombia. we aim to achieve low and stable inflation. for this year, the operational target is inflation between 3. 5 % and 4. 5 % but by the midterm we aim to keep inflation to within 1 percentage point of 3 %. the objective of low, stable inflation is to provide the economy with a nominal anchor. but we recognize that monetary policy must also help to stabilize resource utilization in the economy near its average or long - term level as long as inflation expectations are anchored to the inflation target. the challenge, therefore, is to define an interest rate level for the central bank that is conducive to meeting the quantitative target for inflation and does its best to keep resource utilization close to its long - term level. the aim is to prevent the economy from either overheating or cooling too much. as shown earlier, inflation in colombia rose during first four months of 2007 and although it has fallen back it is still above the center of the target range.

we have to update and improve regulation. i also welcome the work which has been done by the private sector. it seems fair to me to give the financial institutions a chance to work out good practices and benchmark principles for their own voluntary behaviour. if they are not able to do that or if we judge their work insufficient then we have a case for regulation. in any case we should implement the 67 recommendations of the fsf as actively as possible. some recommendations should be implemented in 100 days, others by the end of the year. how do you judge the plans to create a world financial organisation proposed by the austrian chancellor? trichet : i would take the chancellor ’ s suggestions as a call to “ work as actively and as well as possible at the level of europe and the international community ”. i have to say we have the fsf, which has been created after the asian crisis. it is a group which brings together all the relevant financial institutions and groupings. we have the international monetary fund, we have the bank for international settlements, we have the g7 and we have the g20. so my sentiment is that there is a will to make the present framework function as well as possible, and this is good. the new ecb tower in frankfurt is being planned by the austrian architects coop himmelb ( l ) au. are there any delays in the work on this building and when will the tower be ready? trichet : we must be very alert, cautious and prudent, but at the moment there are no delays that i know of. the inauguration could take place at the end of 2011. one final question. do you ever listen to politicians like prime minister berlusconi or president sarkozy when they are criticising the ecb – or does a central banker have to ignore such comments? trichet : let me say that the maastricht treaty has given us full independence. this is very well known the world over. i do not know of any observer or market participant who would call into doubt the fact that we are fully independent and that the president and the members of the governing council are fiercely attached to this independence, as required by the treaty.