firms and at 2. 7 % for households, with interest rates moreover remaining very low. this growth in lending is over twice as high in france, which incidentally leads us to be very vigilant at the high council for financial stability. we are also observing favourable developments in inflation, which is gradually moving back towards our target of 2 % over the medium term [ slide ]. after peaking at the start of 2017, the inflation rate stood at 1. 5 % year - on - year in august. over 2017 as a whole, euro area inflation should reach 1. 5 %, against just 0. 2 % in 2016 ; for the coming years, we foresee inflation at 1. 2 % in 2018 and at 1. 5 % in 2019 – with a change in composition : less “ energy ” inflation, more underlying inflation. this represents a first success : our monetary policy measures have succeeded in warding off the risk of deflation which was still threatening the euro area last year – we mustn ’ t forget that inflation was declining, standing at 0. 2 % in april 2016. that said, despite the progress made towards our target, it is still too slow. the underlying trend in inflation is still not strong enough to support prices in the medium run. underlying inflation, excluding energy and food, has admittedly increased – rising from 0. 8 % in the first quarter of 2017 to 1. 2 % in july and august 2017 – but it still remains at subdued levels, despite the strong 1 / 4 bis central bankers'speeches recovery in activity and employment. a significant factor is the relatively low nominal wage growth. among the cyclical factors, i would like to mention two in particular : first, persistent slack in the labour market – the unemployment rate has fallen sharply in the euro area, to stand at 9. 1 % in july 2017, but it is still too high ; [ slide ] second, backward looking wage bargaining, which means that low past inflation is feeding through to wages today. the influence of these two causes should nevertheless diminish with the recovery in economic growth and inflation. structurally, many studies 3 suggest that the phillips curve, i. e. the relationship between inflation and fluctuations in economic activity or unemployment, appears to have flattened since the 1980s [ slide ]. inflation seems less responsive to changes in economic activity in advanced countries, notably because of globalisation, 4 which appears to exert downward pressure on inflation via the decline in imported goods prices and competition from

andreas dombret : restoring financial stability address by dr andreas dombret, member of the executive board of the deutsche bundesbank, on the occasion of the inauguration of the bundesbank representative to turkey, istanbul, 26 november 2013. * * * dear consul general wolke, dear deputy governor kenc, dear ladies and gentlemen. thank you very much for honouring us tonight with your presence. several centuries ago isaac newton observed : “ we build too many walls and not enough bridges ”. history has shown that there is a lot of truth in this sentence. and i am sure if newton lived today he would be impressed by what has been achieved in istanbul only recently. complementing the existing bridges, the new marmaray tunnel underneath the bosporus strait has just been opened. for the first time in history, a tunnel connects two continents. making connections is also what the bundesbank has in mind in sending representatives abroad. with our network of representatives we aim to cover, in particular, the major g20 countries outside the euro area. turkey is a prime example of a successful emerging market economy. this is also reflected in turkey holding the g20 presidency in 2015. moreover, istanbul is a financial centre of growing importance. therefore, i am very happy indeed that we have now managed to close this gap in our network. it is my pleasure to introduce mr hartmut drager, the bundesbank ’ s first ever representative in turkey. he will be available in the german consulate here in istanbul for your questions related to the bundesbank and the european system of central banks. in turn, mr drager will report back to us in frankfurt on issues that help us to better understand economic and financial developments in turkey. another important objective behind mr drager ’ s secondment to istanbul is our wish to further strengthen our relationship with the central bank of turkey. for this reason i am grateful that my g20 colleague deputy governor kenc was able to join us tonight. earlier this year, the governors of our two central banks signed a memorandum of understanding. this memorandum underlines their joint commitment to forge a deeper relationship between our respective central banks. deputy governor kenc and i have agreed to give added substance to the memorandum by holding a joint expert - level seminar on financial stability issues in the course of next year here in your great city of istanbul. ladies and gentlemen, let me come back to the quote by newton. certainly, before european integration started, europe was used