should contribute to maintaining an environment of macroeconomic stability. at the same time, the monetary policy of the ecb takes into account the fiscal policy stance, as one of the factors which contribute to the outlook for price stability over the medium term. in this respect, an efficient assignment of objectives and instruments, together with a clear division of responsibilities, is in place in the euro area. the policy objectives and the policy execution framework are known to all policy actors. an open exchange of views and information between individual policy actors can assist the overall outcome if this enhances an understanding of the objectives and strategies to pursue them. however, there cannot be any scope for an active co - ordination of fiscal and monetary policies. such active co - ordination is bound to be ineffective, given the inability of both fiscal and monetary policy - makers to fine tune economic developments. commitments to ex ante co - ordination between fiscal and monetary policies may blur the responsibilities of monetary and fiscal authorities and ultimately reduce their incentives to pursue their objectives. the economic outcome of such coordination is likely to be worse than the conduct of policies within the existing institutional set - up as only the latter ensures genuine accountability.

to a pick - up in consumption. in addition, the effects of the changes in the exchange rate on trade are likely to be more than compensated for in the coming years by the expected acceleration in economic activity world - wide. on the latter aspects i should however not conceal that we also see some downside risks to the global recovery in economic activity. notably, the possible correction of macroeconomic imbalances in other major economies remains a factor of risk. in addition, we cannot exclude that the sars epidemic may have negative supply and demand effects, although it is difficult at this juncture to assess the possible implications. what does all this mean for the outlook for price stability? obviously, prospective developments in economic activity should contribute to restraining inflationary pressure in the euro area in the coming years. in this respect, after a period of rising wage growth, despite a context of subdued economic growth in 2001 and early 2002, we have seen signs of stabilisation of wage growth more recently. the effects of recent exchange rate developments will also make a significant contribution to reducing inflationary pressure, although some of the effects may be visible only with a certain time - lag. over the last couple of months, inflation has remained somewhat above 2 %. we expect that, after hovering around 2 % over the coming months, consumer price inflation should fall more significantly in 2004. partly due to the high volatility observed in financial markets in the past, but also due to the low level of interest rates, the euro area economy has continued to accumulate liquid assets significantly above the amount needed to sustain non - inflationary growth. the concerns about this situation are, however, limited, at least as long as economic activity remains subdued. the easing of geopolitical tensions and the recent stabilisation in financial markets should support an unwinding of these portfolio shifts over time. in addition, the moderate growth in loans to the private sector indicates that the growth in monetary aggregates does not reflect internal demand dynamics. thus, overall, not least due to the appreciation of the euro, inflationary pressures have declined significantly over recent months. this assessment will be reflected in our deliberations on monetary policy. as the organiser has asked me to also say a few words on the " policy mix " in the euro area, let me briefly conclude with some remarks on this topic. i think that the macroeconomic policy framework in the euro area is appropriate to ensure sustained and non - inflationary economic growth. fiscal policy