time, it is of the utmost importance that substantial and far - reaching structural reforms be implemented urgently in the euro area in order to strengthen its growth potential, competitiveness and flexibility. in particular, countries which have high fiscal and external deficits or which are suffering from a loss of competitiveness should embark on comprehensive economic reforms. in the case of product markets, policies that enhance competition and innovation should, in particular, be further pursued to speed up restructuring and to bring about improvements in productivity. regarding the labour market, the priority must be to enhance wage flexibility and incentives to work, and to remove labour market rigidities. the governing council, in line with the ecb ’ s opinion of 17 february 2011 on the six legislative proposals on economic governance, urges the ecofin council, the european parliament and the european commission to agree, in the context of their “ trialogue ”, on more stringent requirements, more automaticity in the procedures and a clearer focus on the most vulnerable countries with losses in competitiveness. finally, the governing council welcomes the economic and financial adjustment programme which was agreed by the portuguese government following the successful conclusion of the negotiations with the european commission, in liaison with the ecb, and the international monetary fund. the programme contains the necessary elements to bring about a sustainable stabilisation of the portuguese economy. it addresses in a decisive manner the economic and financial causes underlying current market concerns and will thereby contribute to restoring confidence and safeguarding financial stability in the euro area. the governing council welcomes the commitment of the portuguese public authorities to take all the necessary measures to achieve the objectives of the programme. it considers very important the broad political support for the adjustment programme, which enhances the overall credibility of the programme. we are now at your disposal for questions. bis central bankers ’ speeches

of increasing demand. to address this challenge, where necessary, it is essential for banks to retain earnings, to turn to the market to strengthen further their capital bases or to take full advantage of government support measures for recapitalisation. in particular, banks that currently have limited access to market financing urgently need to increase their capital and their efficiency. to sum up, based on its regular economic and monetary analyses, the governing council decided to keep the key ecb interest rates unchanged following the 25 - basis point increase bis central bankers ’ speeches on 7 april 2011. the information that has become available since then confirms our assessment that an adjustment of the very accommodative monetary policy stance was warranted. we continue to see upward pressure on overall inflation, mainly owing to energy and commodity prices. a cross - check with the signals coming from our monetary analysis indicates that, while the underlying pace of monetary expansion is still moderate, monetary liquidity remains ample and may facilitate the accommodation of price pressures. furthermore, recent economic data confirm the positive underlying momentum of economic activity in the euro area, with uncertainty continuing to be elevated. all in all, it is essential that recent price developments do not give rise to broad - based inflationary pressures. inflation expectations in the euro area must remain firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 % over the medium term. such anchoring is a prerequisite for monetary policy to make an ongoing contribution towards supporting economic growth and job creation in the euro area. with interest rates across the entire maturity spectrum remaining low and the monetary policy stance still accommodative, we will continue to monitor very closely all developments with respect to upside risks to price stability. maintaining price stability over the medium term is our guiding principle, which we apply when assessing new information, forming our judgments and deciding on any further adjustment of the accommodative stance of monetary policy. turning to fiscal policies, current information points to uneven developments in countries ’ adherence to the agreed fiscal consolidation plans. there is a risk that, in some countries, fiscal balances may fall behind the targets agreed by the ecofin council for the necessary and timely correction of excessive deficits. it is essential that all governments meet the fiscal balance targets for 2011 that they have announced. where necessary, additional corrective measures must be implemented swiftly to ensure progress in achieving fiscal sustainability. the implementation of credible policies is crucial in view of ongoing financial market pressures. at the same