are currently seeing the direct effects of such external developments on the hicp rate of inflation, with 2. 3 % in august and, most likely, a higher rate in september. earlier expectations that the high annual increase in energy prices would gradually moderate in the course of 2000, owing to a levelling - off or even decline in energy prices, have not materialised thus far. hence, it will be some time before hicp inflation returns to rates below 2 %. the action which we have taken today should be understood as a means of maintaining confidence in price stability over the medium term. as i said at our previous press conference, higher oil prices imply a loss of income for the economy as a whole. in a market economy, the rise in the price of energy is to be reflected in relative price adjustments, so it should affect supply and demand in relation to both particular sources of energy as well as other goods and services. it will be important for social partners to continue to act as responsibly as they have done in the recent past. wage moderation has made an important contribution to the progress in job creation and in reducing unemployment observed so far. a continuation of this attitude will be a key factor in contributing to non - inflationary growth at a robust pace and should ultimately result in higher employment and the preservation of real income growth for wage earners as well as in sustainable conditions for companies. the governments of the euro area countries can help the economy to adjust smoothly to the increase in energy prices in several ways. one way is to step up efforts towards structural reform aimed at enhancing the functioning of labour and product markets. this will increase the resilience of the economy to adverse shocks, increase competition and ensure appropriate price - setting by companies. governments must avoid the mistakes of the past, when fiscal policies were relaxed in response to the effects stemming from increases in energy prices. at the current juncture, fiscal policies should avoid any procyclical bias and should aim at reaching sustainable fiscal positions in the medium term more quickly.

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