european economy, belonging to the euro area is a " win - win " situation : not only in terms of achieving the concept of the internal market and enjoying the lowest interest rates because all risk premia by comparison with the best - performing currencies are eliminated, which is of particular benefit for those countries which had high market interest rates ; but also because all risks associated with exchange rates are eliminated within one vast integrated economy, which is good for all countries, including those whose market rates were already low. turning to the fifth idea, on the question of whether we can contribute further to growth and job creation while fulfilling the requirements of our mandate, some say : “ you should be less demanding in your definition of price stability. 2 % is too low. make it 3 %. you could then reduce your intervention rates! ” but such advice would backfire : by opting for 3 % we would not only lose the confidence of households but also push all rates up, not down, with those rates incorporating the increase of 1 % in expectations of future inflation. and that would be totally counterproductive … others make a more admissible remark and say : “ your definition of price stability is in line with a good anchoring of inflation expectations. this is good for growth. but are you not doing too much? perhaps you could achieve the same result with lower intervention rates! ” yet this is not what the information we currently have available suggests : if we had been too cautious not only would our fellow citizens share that view ( and then they would find the price rises reasonable ) but also this would have had an impact on the observed price rises ( which would then be significantly lower than our definition of price stability ) and above all on inflation expectations, which would then be significantly less than 2 %. this is not the case at present. regarding inflation expectations in particular, all of the public and private surveys and market indicators converge to 1. 9 % or 2 %. we cannot be arithmetically closer to 2 %! these objective surveys show that we are doing what it necessary to ensure stability and credibility, no less … no more. and that is why the governing council considers our interest rates to be appropriate. we are not biased – i have said that i was not preparing the markets for a rate cut. nor am i preparing them for a rise in interest rates. we remain vigilant, realistic and pragmatic. * * * a good monetary policy is necessary but not sufficient alone – it

european central bank : press conference - introductory statement introductory statement by mr willem f duisenberg, president of the european central bank, and mr christian noyer, vice - president of the european central bank, at the press conference, held in frankfurt, on 5 october 2000. * * * ladies and gentlemen, the vice - president and i are here to report on the outcome of today ’ s meeting of the governing council of the ecb. the following decisions were taken today : 1. the minimum bid rate on the main refinancing operations of the eurosystem will be raised by 0. 25 percentage points to 4. 75 %, starting from the operation to be settled on 11 october 2000. 2. the interest rate on the marginal lending facility will be raised by 0. 25 percentage points to 5. 75 %, with effect from 6 october 2000. 3. the interest rate on the deposit facility will be raised by 0. 25 percentage points to 3. 75 %, with effect from 6 october 2000. including today ’ s adjustment, since november 1999 we have raised ecb interest rates by a total of 225 basis points, with the objective of sustaining price stability in the euro area over the medium term. today ’ s decisions continue to aim at ensuring that upward pressures on consumer prices stemming from oil prices and the foreign exchange rate of the euro do not translate into more permanent inflationary tendencies. it is important to address these risks adequately in order to preserve steady gdp and employment growth in the medium term. let me explain our decisions in greater detail by reporting on our regular examination of recent monetary, financial and economic developments and their implications for monetary policy aiming to maintain price stability in the medium term. starting with the first pillar of the monetary policy strategy of the ecb, the three - month average of annual m3 growth declined to 5. 3 % in the period from june to august 2000, from 5. 5 % in the period from may to july 2000. as had been indicated earlier, in august the preparations of telecommunications firms to transfer the funds due in early september to purchase licences in the german umts auction appeared to have a temporary upward impact on m3 growth. taking this special factor into account, short - term developments in monetary aggregates seem to be more moderate than the august data would suggest. this notwithstanding, from a medium - term point of view, liquidity conditions continue to be ample in the euro area. this assessment is based on the protracted deviation of m3 growth