be particularly important, in the current phase of strengthening economic growth, that wages continue, on average, to grow at rates compatible with the objective of price stability. any attempt for wages to catch up in reaction to recent oil price increases would be highly detrimental to the current favourable growth prospects, since monetary policy would need to react to the resulting upward pressure on prices. governments also have to play a role in order not to convey the false impression that the costs stemming from the increase in oil prices could be avoided by relaxing budgetary policies. this would not be in line with the needs of establishing budget positions in balance or in surplus and would complicate the fostering of tax reforms conducive to a stronger growth potential of the euro area. i should also like to reiterate that the prospects for a stronger potential for growth in the euro area will depend very much on progress made in enhancing the flexibility of labour and goods markets in the euro area. although reform efforts in several countries have been heading in the right direction, there is still much to be done when looking at the area as a whole. finally, let me also say a few words about recent exchange rate developments. i noted earlier that, from a monetary policy point of view, these developments are a cause for concern as they add to the upward pressure on consumer prices in the euro area. these concerns are compounded by the fact that the exchange rate of the euro does not appear appropriate when looking at economic fundamentals. as you are aware, we have been expressing this concern for some time. in the meantime, we have witnessed a considerable improvement in the economic growth prospects for the euro area. at the same time, owing to measures taken by the governing council, the outlook for price stability in the medium term in the euro area has remained intact. at present, inflation in the euro area is among the lowest in the world. the fact that the euro has continued to depreciate over recent months is not in line with these strong economic fundamentals in the euro area. recent global exchange rate developments are also not in line with international balance of payments positions. our concerns on this issue remain serious and we shall monitor developments closely. let me now give the floor to the vice - president to say a few words about other issues discussed by the governing council. first, i should like to inform you that the governing council has agreed on a target reimbursement scheme for the benefit of target participants in the event of malfunction

mario draghi : imfc statement statement by mr mario draghi, president of the european central bank, at the fortieth meeting of the international monetary and financial committee, washington dc, 18 october 2019. * * * euro area developments and outlook the euro area economy has expanded at a slower pace since the beginning of last year, marking a sizeable moderation in the pace of economic expansion. according to the latest eurostat release, quarterly gdp growth was 0. 2 % in the second quarter of 2019. this slowdown in growth mainly reflects the prevailing weakness of international trade in an environment of prolonged global uncertainties, which are particularly affecting the euro area manufacturing sector. these developments are also reflected in economic sentiment indicators that have continued to worsen over recent months. at the same time, the unemployment rate in the euro area has continued its downward trend, falling to its lowest level since may 2008. the number of people in employment has increased by more than 11 million since mid - 2013. the services and construction sectors show ongoing resilience and the euro area expansion is also supported by favourable financing conditions, further employment gains and rising wages, the mildly expansionary euro area fiscal stance and the ongoing – albeit somewhat slower – growth in global activity. since the imf spring meetings in april 2019, short - term economic projections have been revised downwards. the latest ecb staff macroeconomic projections for the euro area, published in september, put annual real gdp growth at 1. 1 % in 2019, 1. 2 % in 2020 and 1. 4 % in 2021. the risks surrounding the euro area growth outlook remain tilted to the downside and mainly pertain to the prolonged presence of uncertainties related to geopolitical factors, the rising threat of protectionism and vulnerabilities in emerging markets. we welcome a deal on an orderly exit of the united kingdom from the european union. headline inflation in the euro area has lately been hovering around 1. 0 % and stood at 0. 8 % in september, lower than in the first months of this year, when it was around 1. 5 %. this largely reflects the decline in the annual rate of change in energy prices. measures of underlying inflation remain generally muted. while labour cost pressures have strengthened and broadened amid tightening labour markets, their pass - through to inflation is taking longer than previously anticipated. looking ahead, underlying inflation is expected to increase over the medium term, supported by our monetary policy measures, the ongoing economic expansion and robust wage