to. the eu commission should thus not give italy, france and belgium more time to reduce their high budget deficits? that is matter to be decided by the eu commission. the current situation, however, is not exactly optimal in this respect. the eu commission has rightly censured countries like italy, france and belgium because they have not met their deficit targets. it has, however, not taken any further measures. that increases uncertainty because nobody knows whether the rules are currently being applied in full or not. the eu commission should therefore come to an unequivocal decision that ensures the credibility of the stability and growth pact as soon as possible. that does not fall within the mandate of the ecb. our task is to ensure price stability. this very aim is now thought by economists to be at risk – in december the price level even fell. is that already deflation? the ecb ’ s definition of it seems so far to have been vague. i would speak of deflation when both prices and output are falling and the problem is getting worse and worse – because people don ’ t invest or consume when they are waiting for prices to fall further. so far, that hasn ’ t been the case. however, inflation rates throughout europe are extremely low and far removed from 2 %, from what central bankers define as price stability. we cannot ignore that. but prices have recently fallen simply because oil has become so much cheaper. why is the ecb allowing that to put it under pressure to act? you can ’ t influence short - term fluctuations in the oil price anyway. a falling oil price is generally a one - off shock, but, first, this time it ’ s unusually large. second, inflation was too low even beforehand, and inflation expectations are moving further and further away from 2 %, which we aim in our monetary policy to achieve over the medium term. bis central bankers ’ speeches so you would prefer to ignore the fall in the oil price as you ’ ve done in the past – but you can ’ t afford to at the moment? we do indeed want to screen out short - term effects, but it ’ s becoming more and more difficult to keep to this. in the current environment, the continuous decline in oil prices increases the danger that people will lose confidence in our inflation target. but will the ecb be able to achieve much in any case? even a €1, 000 billion government bond programme is forecast to create only 0. 1 to 0

resale activity have been robust, supported by low mortgage rates and a desire for more living space. stronger foreign demand and rising prices have boosted activity and exports in the oil and gas, mining and manufacturing sectors. business investment intentions are also rising as confidence in the recovery has improved. in all, the level of economic activity at the end of last year was almost 1 percent higher than we had anticipated. however, recent data tell a mixed story about the labour market, which remains a long way from a full recovery. job losses in december and january were sizable. the losses were concentrated in quebec and ontario, in sectors most affected by the restrictions and mainly among part - time positions. but employment was resilient in some other sectors, surpassing levels seen before the pandemic. the near - term inflation outlook has been revised up. we now expect that inflation will move temporarily above our 2 percent target in the coming months, to around the top of the 1 to 3 percent control range. that reflects rising prices for gasoline, combined with adjustments from the prices of numerous goods and services that fell sharply when the pandemic struck a year ago. we then expect inflation to moderate, given excess capacity in the economy. accumulated savings and consumption let ’ s now turn to the impacts of the pandemic on income, spending and savings. the virus caused unprecedented losses in jobs and labour income. it also reduced household spending. however, extraordinary fiscal support more than offset these income losses, so on balance, household income increased. when you couple this increase with the drop in spending, household savings rose dramatically. this outcome may seem puzzling, but the story behind it largely rests on the pandemic ’ s uneven impact across sectors and workers. let ’ s look first at the impact on labour income. about three million jobs disappeared between february and april 2020. high - contact sectors — primarily services — as well as the lowwage workers employed in these sectors — primarily women and youth — were the hardest hit. jobs for workers earning less than $ 16 an hour fell 27 percent in 2020, almost five times the decline in overall employment. together, the hospitality and retail trade sectors explain 30 percent of the shortfall in employment income, while less than 10 percent can be attributed to sectors at the top of the wage scale ( chart 1 ). - 4chart 1 : losses in labour income in 2020 occurred primarily in low - wage sectors share of the total loss in compensation of employees per sector by wage