growth momentum of the euro area economy, thereby supporting a return of inflation towards our inflation aim. the euro area has now enjoyed five consecutive years of growth. this prolonged economic expansion is reflected in the labour market : around 8. 4 million more people are employed now than at the bottom of the trough in mid - 2013. the jobs lost during the crisis have been entirely recovered, and the unemployment rate stands at its lowest level in nearly nine years, despite an increase in the labour force of more than 2 %. recent business surveys point to a continued positive outlook for employment. our monetary policy measures have thus been successful. progress towards a sustained adjustment in the path of inflation in spite of the recent moderation in economic activity, economic conditions remain favourable. the moderation in the first half of 2018 is attributable to a pull - back from the high levels of growth in the previous year, compounded by some temporary and supply - side factors, as well as a weaker impetus from external trade. the pace of economic growth is expected to stay above potential in the coming years. favourable financing conditions, a robust labour market and steady income and profit growth are expected to continue to support private consumption and investment. this outlook is contingent on a continued supportive business environment at the global level and on the pursuit of institutional and structural reforms in the euro area. headline inflation increased significantly in may, primarily due to higher oil prices, and stood at 2. 0 % in june according to eurostat ’ s flash estimate. eurosystem staff expect headline inflation to stand at 1. 7 % in each year over the period from 2018 to 2020, supported by the continuing economic expansion, high levels of capacity utilisation, labour market tightness and rising wage growth. this stable path of headline inflation conceals a decline in the annual rate for the energy component, offset by gradually rising hicp inflation excluding energy and food, as capacity constraints are expected to become increasingly tight. this expectation is consistent with the incipient increase in measures of underlying inflation from earlier lows. the risks surrounding the euro area growth outlook remain broadly balanced. however, risks related to global factors, including the threat of increased protectionism, have become more prominent. moreover, the risk of persistent heightened financial market volatility adds to the downside factors. against this backdrop, the ecb ’ s governing council carried out a thorough assessment of price and wage pressures and the inflation outlook at its june meeting. its assessment of progress towards a sustained

peter praet : ensuring a sustained adjustment in inflation keynote speech by mr peter praet, member of the executive board of the european central bank, at the national bank of romania, bucharest, 3 july 2018. * * * accompanying slides of this speech. it is a great pleasure for me to be here in bucharest today. since romania joined the european union on 1 january 2007, the world has changed considerably. the global financial crisis has challenged the european union and its member states. several of them, including romania, have implemented significant macroeconomic and financial adjustments. the euro area sovereign debt crisis exposed the institutional weaknesses of our economic and monetary union and notably led to the push for the banking union and the creation of the european stability mechanism. romania has achieved a lot since it joined the european union. starting from very low gdp per capita, the country has made significant progress in terms of real convergence, with real gdp per capita moving from about 40 % to roughly 60 % of the eu average. further structural reforms are necessary to unlock the full potential of the economy and pave the way for continued sustainable convergence. further reforms are also indispensable to ensure the smooth functioning of our economic and monetary union. our monetary union is gradually becoming stronger. last week the euro summit agreed to take further steps towards completing the banking union and to strengthen the european stability mechanism, including by providing the backstop to the single resolution fund. this is not yet the end of the journey towards a genuine economic and monetary union, but the meseberg declaration maps out a path towards further institutional developments that will, over time, make our monetary union stronger, to the benefit of all europeans. as a european institution, the ecb responded forcefully to the challenges posed by the crisis. in doing so, it acted in complete independence and fully in line with its mandate to maintain price stability in the euro area as a whole. this independence, granted to central banks by the treaties, is an invaluable asset, helping them to act as guardians of price stability in good as well as in challenging times. i will first consider our monetary policy response to the crisis, before turning my attention to recent economic developments. i will then elaborate on the measures that we took last month. overview of the monetary policy response to the crisis a drawn - out phase of overborrowing and leverage came to an abrupt end in 2008. this set in train a turbulent decade of challenges to both financial stability and to the macroeconomic