european central bank : press conference - introductory statement introductory statement by mr jean - claude trichet, president of the european central bank, and mr lucas papademos, vice - president of the european central bank, frankfurt am main, 12 january 2006. * * * ladies and gentlemen, the vice - president and i would first like to express to all of you our best wishes for the new year and welcome you to this press conference. let me now report on the outcome of today ’ s meeting of the ecb ’ s governing council, which was also attended by commissioner almunia. on the basis of our regular economic and monetary analyses, we have decided to keep the key ecb interest rates unchanged following the increase of 25 basis points on 1 december 2005. the information which has become available since then supports the assessment that an adjustment of our very accommodative monetary policy stance was warranted. it remains essential to keep medium to long - term inflation expectations in the euro area solidly anchored at levels consistent with price stability. such anchoring of inflation expectations is a prerequisite for monetary policy to make an ongoing contribution towards supporting economic growth and job creation in the euro area. maintaining price stability over the medium term is our guiding principle, and we will consistently apply it when examining new information, making our judgements and taking decisions. with interest rates across the whole maturity spectrum remaining historically low in both nominal and real terms, and with our monetary policy stance remaining accommodative, we will continue to monitor very closely all developments with respect to risks to price stability over the medium term. allow me to explain our assessment in greater detail, turning first to the economic analysis. according to the information available, real gdp growth did indeed improve in the second half of 2005, as we expected. according to eurostat ’ s first estimate, real gdp grew at a quarter - on - quarter rate of 0. 6 % in the third quarter of 2005, compared with 0. 4 % in the second quarter. the breakdown of gdp data for the third quarter of 2005 confirmed a stronger contribution from domestic demand. moreover, recent economic indicators and survey data support the view that the expansion of economic activity broadly maintained its momentum in the fourth quarter of 2005 and will continue to do so in the first months of 2006, notwithstanding the impact of high oil prices. looking further ahead, the conditions remain in place for sustained growth of economic activity, in line with our staff projections and other available forecasts.

our national sovereignties that we can provide a more effective defence of our common interests ”. iv let us be clear : previously, for many, monetary policy was, in practice, largely anchored to deutsche mark policy within the framework of the european monetary system, which was a necessary step, but insufficient. there was a risk of the westphalian order becoming a german monetary order. the introduction of the euro ensured that monetary policy decisions were taken collegially by the governing council. in addition, the ecb became one of the most influential central banks in the world – and the euro the second most important international reserve and exchange currency v – giving it a greater capacity to cushion shocks, and more agility and autonomy in its decision - making, including with regard to the us federal reserve. in the words of mario draghi, europe gained the ability “ to control its destiny ”. vi is this stage stable and sufficient on its own? us economists sincerely doubted it 30 years ago : a currency without a unified state could never work. and yet the euro has continued to get stronger, throughout the challenging crises of the 21st century, thanks to strong institutions and the unshakeable, shared determination of the european people. for federalists too, monetary union cannot exist without political union : it is not my place here to respond to that. i simply point out, at all the international meetings that i take part in, that europe has invented a form of monetary sovereignty that is recognised – and in some cases envied – throughout the world. b ) central bank independence, but subject to two political conditions the second metamorphosis lies in an institutional development : throughout the 20th century, central banks were gradually granted renewed independence from political authorities. this pragmatic movement became widespread in developed countries from the 1980s onwards, in response to the great page 4 of 6 inflationary wave of the 1960s and 1970s, and to two temptations : the temptation to finance public debt by printing money ; and the temptation to raise interest rates too late because it is always unpopular. this year also marks the 30th anniversary of the 1993 law establishing the banque de france ’ s independence, vii and the ecb also enjoys a high degree of independence under the european treaties. viii but “ independence ” does not mean “ isolation ”, and can only exist subject to two very clear political conditions : ( i ) an ex ante condition : independence is not self - conferred but rather attributed by the democratic authority for a specific