determining growth. over the last decade, the diverging trend in hourly labour productivity growth has been the main reason explaining the growth differential between the euro area and the us. during the 1980 ’ s and the first half of the 1990s, hourly labour productivity in the euro area grew on average by 2. 4 %, then it decelerated to 1. 3 % between 1996 and 2006. by contrast, us hourly labour productivity growth rose from 1. 3 % to 2. 1 % over the same period. at the sectoral level, the gap in labour productivity growth between the euro area and the us has been mainly driven by some market service sectors intensively using information and communication technologies ( icts ) namely the wholesale and retail trade sectors as well as the financial sectors. in contrast to the us, in these two sectors, labour productivity growth significantly decelerated in the euro area over the last 15 years. in the wholesale and retail trade sectors, hourly labour productivity significantly accelerated in the us from 0. 7 % to 2. 6 % over the periods 1980 - 1995 and 1996 - 2004, while at the same time it decelerated in the euro area from 2. 3 % to 1. 3 %. in the financial sectors, over the same periods, hourly labour productivity growth has also accelerated in the us and has been roughly 4 times higher than the growth rate observed in the euro area over the period 1996 - 2004. several causes have been mentioned to explain this downward trend in the euro area. specific policies aiming at increasing employment particularly in the unskilled segment of the labour market may have contributed to the observed slowdown in labour productivity growth. however, this apparent trade - off between labour utilisation and productivity is likely to be a temporary phenomenon that should progressively fade, when the economy reaches a higher “ equilibrium ” labour / output ratio. there is another major reason that explains the big difference in the rate of labour productivity growth in europe compared with the us, which in my view is a major policy issue, namely the fact that the european economy, being more inflexible, does not fully take oecd employment outlook. data for 2006 are partly estimates. there is in particular considerable scope to raise the employment rate of young people and further reform needs to be undertaken to achieve the more ambitious long - term objective of a 75 % overall employment rate. advantage of all the opportunities offered by new technologies, including ict, and by the new division of labour initiated by globalisation

achieved anchoring of inflation expectations over the last eight years. 7 this in turn has contributed to low macroeconomic volatility in the euro area. 8 when inflation expectations are well anchored, temporary deviations of inflation from levels consistent with the central bank ’ s inflation objective are not expected to be long - lasting. as a consequence, macroeconomic shocks will have a smaller impact on inflation expectations and the evolution of inflation over time will be less persistent, with the result that inflation and economic activity will be more stable. it is certainly true that other central banks which put less emphasis on monetary analysis have also achieved low and stable inflation expectations and low macroeconomic volatility. however, it is important to bear in mind that the uncertainty faced by the ecb has been much higher than that faced by other more established central banks. our success in maintaining low and stable inflation expectations in a rather adverse macroeconomic environment is also due to the commitment to be continuously alert upon monetary trends built into our strategy by the money pillar. this brings me to the second question, on the criticism that our policy actions have not corresponded to the announced role of money in our strategy. i know that this objection is sometimes put forward by critical observers who argue that there is no direct correlation between our policy rate decisions and monetary developments. this kind of criticism does not discomfort me, because the relevance of the monetary pillar can anyway not be judged based on the simple bivariate correlation of policy rates with the growth rate of headline m3 ( or any other single monetary indicator ). first, such a simplistic approach cannot reflect the crucial role of cross - checking the information derived from the economic and the monetary analyses that is a key feature of our monetary policy strategy. second, it overlooks the broad - based and by no means mechanical character of the ecb ’ s approach to monetary analysis, which jurgen has also stressed yesterday. allow me to elaborate on the second point. monetary data are contaminated by noise at higher frequencies blurring the signal from their low - frequency movements which provide information about medium to longer - run inflation trends. the ecb ’ s monetary analysis aims to extract this low - frequency signal by assessing a large range of monetary indicators based on statistical tools and judgement in real time. since the signal extracted from the monetary analysis refers to the low frequency it will not change much from month to month. as a consequence, it will, by its very nature, normally not be closely correlated with individual policy moves, but will rather