the accommodative side, with ecb interest rates moderate, money and credit growth vigorous. therefore acting in a firm and timely manner to ensure price stability in the medium term is warranted. we are totally transparent in our definition of price stability. not all central banks are as transparent as we are. we have a very clear mandate and a very clear monetary policy concept. so every observer, investor, every saver, in europe and the rest of the world, knows that we will do what is necessary to ensure price stability. by the way, they trust us. otherwise, their inflation expectations would not be in line with our definition of price stability. they also know that our policy is not to pre - commit in any respect to future action. we will do what is necessary, but we never unconditionally pre - commit. the markets interpreted your last press conference and the ecb monetary policy statement, in particular the change from “ low ” to “ moderate ” as the description for the interest rates, as meaning that a peak on the current tightening cycle is very near. would you say they are reflecting the thinking of the ecb council? a number of observers have taken notice of a change in the wording, from “ low ” to “ moderate ” and also from “ accommodative ” to “ continues to be on the accommodative side ”. it was the intention of the governing council to make these slight changes. on future decisions let me repeat : we will do what is necessary to ensure price stability. how much weight does the ecb give to measures of the output gap? does the ecb it have a target for trend growth in the eurozone? our monetary policy concept calls on us to counter inflationary risks in the medium term, and be credible in delivering price stability over time. our policy is neither commanded by calculations of an output gap, nor of a nairu [ non - accelerating - inflation - rate - of - unemployment ], or of the computation of a theoretical neutral rate. we are guided by our own judgement of the risks to price stability based on our two - pillar strategy : our economic analysis and our monetary analysis. in doing so we are not the prisoner of any kind of model, but rather we are keen on having as comprehensive as possible analysis in order to take the best decision in situations that are always very complex. at this stage the council does not think that it is the time to consider increasing the

, capital goods and intermediate goods. but since 2001, exports in all of these sectors ( including consumer goods ) have been growing more dynamically in germany than in france. if the traditional analysis explains very little in terms of the differences in export performance, what else accounts for these differences? are the worried voices right after all? no, they are not. first of all, intra - euro - area trade is more important for france than it is for germany. in france, the share of exported goods to other emu countries amounted to 48 % of all exports in 2005, whereas in germany it was 5 pp lower. consequently, france appears less dependent on the euro ’ s exchange rate than germany. however, the bdi ( the federation of german industries ) said last month that german industry could live with the strong euro, as long as it does not rise sharply. even more importantly, the wishful thinking behind a policy - driven weakening of the euro does not go to the core of the problem. all things considered, differences in export performance are linked to differences in competitiveness. as far as price competitiveness is concerned, it has increased in both germany and france since the start of emu. but in germany, the increase has been more pronounced. one reason for this has been wage policy moderation in germany. in addition to that – and unlike french firms – german firms have boosted their competitiveness by increasingly outsourcing their production processes to low - cost countries. so, to some extent, the recent weakness of french export performance compared to germany can be explained by stronger gains in german price competitiveness. but what is more important : overall export performance in france cannot adequately be explained by traditional factors. estimations usually contain a noteworthy residual term. what accounts for it? its reasons actually are more of a microeconomic nature, as has already been put forward by the french council of economic analysis 1. examples are product differentiation, technological progress, reputation, marketing, or the export readiness of smes. for instance, the figure for french firms that export is only 4 %, compared with 11 % in germany. moreover, french export firms are, on average, smaller than german ones. the upshot of this is that competitiveness is enhanced by firms, not in exchange rate markets. if politicians want to support domestic industries they should do so by increasing the flexibility of labour and product markets through structural reforms, not by interfering with market forces. but let me come back to my original theme