european central bank : press conference – introductory statement introductory statement by mr jean - claude trichet, president of the european central bank, frankfurt am main, 11 january 2007. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our first press conference in 2007. let me therefore wish you all a very happy new year. i would also like to take this opportunity to welcome slovenia as the thirteenth country to adopt the euro as its currency. accordingly, mr gaspari, the governor of banka slovenije, became a member of the governing council on 1 january 2007. let me now report on the outcome of our meeting, which was also attended by the president of the eurogroup, prime minister juncker, and commissioner almunia. on the basis of our regular economic and monetary analyses, we decided at today ’ s meeting to leave the key ecb interest rates unchanged. the information that has become available since our last meeting has further underpinned the reasoning behind our decision to increase interest rates in december. it has also confirmed that very close monitoring of all developments is of the essence so that risks to price stability over the medium term do not materialise. this will permit medium to longerterm inflation expectations in the euro area to remain solidly anchored at levels consistent with price stability. such anchoring is a prerequisite for monetary policy to make an ongoing contribution towards supporting sustainable economic growth and job creation in the euro area. our monetary policy continues to be accommodative, with the key ecb interest rates remaining at low levels, money and credit growth very strong, and liquidity in the euro area ample by all plausible measures. therefore, looking ahead, acting in a firm and timely manner to ensure price stability in the medium term is warranted. turning first to the economic analysis, quarter - on - quarter real gdp growth in the euro area was 0. 5 % in the third quarter of 2006, after very strong growth in the first half of last year. domestic demand remained the main driver of economic growth, thus confirming the anticipated broadening of the recovery and pointing to the increasingly self - sustaining nature of economic expansion in the euro area. drawing on the latest information, the evidence from various confidence surveys and indicatorbased estimates supports the assessment that robust economic growth has continued and that the situation in labour markets has improved further. while some volatility in the quarter - on - quarter growth rates around the turn of

, it is also important that wage settlements move away from automatic, backward - looking indexation mechanisms. turning to the monetary analysis, annual m3 growth rose to 9. 3 % in november. this represents its highest annual rate of growth since the introduction of the euro and, indeed, its strongest aggregate growth in the euro area group of countries since 1990. while the significance of monthly figures should not be overstated, as they may also be influenced by temporary factors, the series of strong monetary data over the past couple of months underscore the continued very dynamic underlying rate of broad money expansion in the euro area. rising short - term interest rates, in combination with low long - term interest rates, have exerted only a limited influence over monetary developments in recent months. this has mainly taken the form of shifts among the components of m3 rather than constraining the overall expansion of m3 itself. in particular, over recent months the annual growth rate of m1 has moderated somewhat, reflecting shifts from overnight deposits into other components of m3 that offer more market - related returns. all in all, the rate of monetary and credit expansion remains rapid, reflecting the low level of interest rates and the strengthening of economic activity in the euro area. in particular, the annual growth rate of loans to the private sector was 11. 2 % in november, unchanged from the previous month. while – in the context of rising interest rates – the growth of household borrowing has shown signs of stabilisation in recent months, albeit at very high rates, the growth of borrowing by non - financial corporations continues to trend upwards. thus, credit continues to expand rapidly and in a broadbased fashion, thereby remaining the main driver of the current strong monetary growth when viewed from the counterpart side of the mfi balance sheet. taking a medium to longer - term perspective, the latest developments are consistent with a continuation of the persistent upward trend in the underlying rate of monetary expansion. following several years of robust monetary growth, the liquidity situation in the euro area is ample by all plausible measures. continued strong monetary and credit growth in an environment of ample liquidity point to upside risks to price stability over the medium to longer term. monetary developments therefore continue to require very careful monitoring, particularly against the background of improved economic conditions and continued strong property market developments in many parts of the euro area. to sum up, annual inflation rates are projected to hover around 2 % this year and next, with risks to this outlook remaining on the upside. given