expected from their central bank, that achieving it is taken for granted. even our regular exchanges of views have sometimes dealt less with the “ m ” than with the “ e ” of emu! 2 ) economic and monetary developments achieving price stability through alertness and fierce independence sets the framework for our day - to - day actions. in this context, let me report on recent economic and monetary developments. note that as we have entered the purdah - period, nothing i say has any bearing on upcoming monetary policy decisions. we expect real gdp growth in the euro area to be very moderate in the second half of this year. growth is dampened by a slowing pace of global growth, by declines in equity prices and business confidence, and by continuing tensions in segments of financial markets as well as in some sovereign debt markets. the more moderate economic outlook is confirmed in the ecb ’ s september projections. the risks to the economic outlook, which previously were balanced, are now on the downside, mainly relating to tensions in some financial markets. turning to prices, inflation was 2. 5 % in august, and rose to 3 % in september according to the eurostat flash estimate, almost exclusively as a result of oil price developments. we expect inflation to stay above 2 % over the coming months. next year, it should fall below that level, depending on commodity price and wage developments. this pattern is also reflected in the latest ecb projections of inflation ranging between 1. 2 % and 2. 2 % next year. the risks to the medium - term outlook for inflation were broadly balanced in the eyes of the governing council in its last meeting, whereas before they were seen as being on the upside. our monetary analysis indicates that the underlying pace of monetary expansion remains moderate. liquidity accumulated prior to the period of financial market tensions continues to be ample but recent data indicate that part of it may be held more for precautionary reasons than for spending. finally, in the context of our continuing analysis of the euro area economy, let me draw your attention to today ’ s release of the 2011 structural issues report. this deals with structural features of distributive wholesale and retail trade and their impact on prices in the euro area. the distributive trade sectors are not only economically important in their own right, but also relevant to monetary policy. ultimately, it is retailers who set the prices of most consumer goods and they are a key interface between producers and consumers. i very

past as some member states opposed it. can it be revitalised in light of more recent developments? a choice has to be made, and it should be clear. ladies and gentlemen, let me conclude. economic and monetary union has recently celebrated its tenth anniversary. as a ten - yearold, emu is becoming less of a child and more of an adolescent. the trials of childhood were manifold : the creation of a credible central bank, the design of an effective and transparent monetary strategy, the distribution of new banknotes and coins, and the shaping of sound economic policies. getting any of these basics wrong would have had catastrophic consequences. yet emu has successfully overcome the challenges of its childhood, while withstanding the many external shocks of the last decade. the trials of adolescence are lurking ahead and will prove equally demanding. the continued success of emu will depend on how effectively these new challenges are addressed. thank you for your attention.