duration of restriction. in particular, our interest rate decisions will be based on our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission. the decisions taken today are set out in a press release available on our website. i will now outline in more detail how we see the economy and inflation developing and will then explain our assessment of financial and monetary conditions. economic activity 1 / 4 bis - central bankers'speeches the economy is likely to remain subdued in the coming months. it broadly stagnated over the first half of the year, and recent indicators suggest it has also been weak in the third quarter. lower demand for the euro area's exports and the impact of tight financing conditions are dampening growth, including through lower residential and business investment. the services sector, which had so far been resilient, is now also weakening. over time, economic momentum should pick up, as real incomes are expected to rise, supported by falling inflation, rising wages and a strong labour market, and this will underpin consumer spending. the labour market has so far remained resilient despite the slowing economy. the unemployment rate stayed at its historical low of 6. 4 per cent in july. while employment grew by 0. 2 per cent in the second quarter, momentum is slowing. the services sector, which has been a major driver of employment growth since mid - 2022, is now also creating fewer jobs. as the energy crisis fades, governments should continue to roll back the related support measures. this is essential to avoid driving up medium - term inflationary pressures, which would otherwise call for an even stronger monetary policy response. fiscal policies should be designed to make our economy more productive and to gradually bring down high public debt. policies to enhance the euro area's supply capacity – which would be supported by the full implementation of the next generation eu programme – can help reduce price pressures in the medium term, while supporting the green transition. the reform of the eu's economic governance framework should be concluded before the end of this year and progress towards capital markets union should be accelerated. inflation inflation declined to 5. 3 per cent in july but remained at that level in august, according to eurostat's flash estimate. its decline was interrupted because energy prices rose compared with july. food price inflation has come down from its peak in march but was still almost 10 per cent in august. in the coming months, the

vitor constancio : presentation of the european central bank annual report 2016 to the committee on economic and monetary affairs of the european parliament introductory remarks by mr vitor constancio, vice - president of the european central bank, to the committee on economic and monetary affairs of the european parliament, brussels, 10 april 2017. * * * mr chairman, honourable members of the committee on economic and monetary affairs, ladies and gentlemen, i am honoured to be here today before your committee to present the ecb annual report for 2016. the annual report is an essential element of our democratic accountability. it supports the democratic debate regarding our decisions. and our accountability does not stop with our reporting obligations. this occasion ensures that our annual report will be discussed by the representatives of the people of europe. we take our accountability to the european parliament extremely seriously. this is the beginning of a well - established process. our exchange today, and the regular dialogue between our two institutions, will feed into the european parliament resolution on the ecb annual report. this is very important for us because we want to make sure that we deliver on the democratic mandate that was conferred upon the ecb. the ecb is independent so that it can act in line with this mandate, without political interference. and it is democratically and legally accountable to ensure that it does act in line with this mandate. as is customary, today we are also publishing our feedback concerning your resolution on our previous annual report. in introducing our discussion, i will touch upon our monetary policy decisions over the past year and their contribution to the ecb ’ s primary objective of maintaining price stability – a precondition for sustainable growth and job creation. that objective – which serves as a performance benchmark – supports both our independence and the accountability of our actions. i will then continue by emphasising the importance of a strong financial system for a prosperous euro area. the euro area recovery and the support provided by the ecb ’ s monetary policy 2016 was, in many ways, a challenging year. the last time i spoke before this committee, in april 20161, the global economy was emerging from an acute episode of financial instability. that episode had once again given rise to another phase of deep pessimism concerning not only the capacity of the world economy to generate positive growth, but also the ability of central banks to steer their economies by applying unconventional monetary policy tools. inflation was heading towards new lows, dragged down by a renewed sharp fall in commodity prices. twelve