help governments bring down budget deficits and debt ratios on a sustained basis. governments should now make a strong start in this direction in their medium - term plans for fiscal and structural policies. inflation according to eurostat's flash estimate, annual inflation dropped to 2. 2 per cent in august, from 2. 6 per cent in july. energy prices fell at an annual rate of 3. 0 per cent, after an increase of 1. 2 per cent in the previous month. food price inflation went up slightly, to 2. 4 per cent in august. goods inflation and services inflation moved in opposite directions. goods inflation declined to 0. 4 per cent, from 0. 7 per cent in july, while services inflation rose, to 4. 2 per cent from 4. 0 per cent. most measures of underlying inflation were broadly unchanged in july. domestic inflation edged down only slightly, to 4. 4 per cent from 4. 5 per cent in june, with strong price pressures coming especially from wages. negotiated wage growth will remain high and volatile over the remainder of the year, given the significant role of one - off payments in some countries and the staggered nature of wage adjustments. at the 2 / 4 bis - central bankers'speeches same time, the overall growth in labour costs is moderating. the growth in compensation per employee fell further to 4. 3 per cent in the second quarter, the fourth consecutive decline, and ecb staff project it to slow markedly again next year. despite weak productivity, unit labour costs grew less strongly in the second quarter, by 4. 6 per cent, after 5. 2 per cent in the first quarter. staff expect unit labour cost growth to continue declining over the projection horizon owing to lower wage growth and a recovery in productivity. finally, profits are continuing to partially offset the inflationary effects of higher labour costs. the disinflation process should be supported by receding labour cost pressures and the past monetary policy tightening gradually feeding through to consumer prices. most measures of longer - term inflation expectations stand at around 2 per cent, and the market - based measures have fallen closer to that level since our july meeting. risk assessment the risks to economic growth remain tilted to the downside. lower demand for euro area exports, owing for instance to a weaker world economy or an escalation in trade tensions between major economies, would weigh on euro area growth. russia's unjustified war against ukraine and the tragic conflict in the middle east are major sources of

with the idea i am about to propose. this theme is saying to me that we must not be too engrossed in the business of analyzing the past lest we forget to look ahead toward unchartered waters we must yet traverse. i think that after three and one half years of meetings and conferences we are all fatigued with an overload of hind - sight wisdom that offers perfect explanations for the 2008 global financial crisis that none or very few saw coming. the irony is that very few of us saw the coming of the 2008 crisis because we were too busy analyzing the crisis before that one. now, the fact that the caribbean went relatively unscathed from the global financial crisis, except for the clico and baico experiences, is by no means an indication that we were any better prepared ; in my view it was mere lucky happenstance and this is what we need to address in the future. i am sure caricom heads of government at their june 2009 meeting in georgetown, guyana had this near miss catastrophe squarely in their rearview mirrors when they agreed on the urgency of putting in place a strong framework for regional financial stability. citing, among other things, the clico and baico experiences, they tasked the committee of central bank governors to prepare a proposal for the creation of a regional architecture for financial stability for final consideration by the council for finance and planning ( cofap ). the mandate was to accelerate the construction of a robust regional financial stability framework. bis central bankers ’ speeches the committee of central bank governors set about this task diligently. first, they secured funding from the inter - american development bank for a regional financial risk assessment project under the aegis of the caribbean centre for money and finance ( the ccmf ). then, a three - day workshop for regional regulatory stakeholders was held in port of spain, trinidad on 3 to 5 march 2011 to discuss the requirements and actions needed to develop the framework and to agree on the outline of the terms of reference for the planning and implementation of a financial architecture that supports regional financial stability. from all accounts, the workshop was well attended and yielded several recommendations on governance and operational structure of a regional financial stability board. however, progress on this project recently stalled as governors remain fundamentally at odds over a few of the major recommendations, in particular : • the recommendation for the ccmf to become the central reporting body for financial stability ; • the legality of regional regulators sharing sensitive confidential information with a non - regulatory body