as well as by the progress made with fiscal consolidation and structural reforms. moreover, the low level of the price of oil should continue to support households ’ real disposable income and corporate profitability and, therefore, private consumption and investment. furthermore, demand for euro area exports should benefit from improvements in price competitiveness. however, economic growth in the euro area is likely to continue to be dampened by the necessary balance sheet adjustments in a number of sectors and the sluggish pace of implementation of structural reforms. this assessment is also broadly reflected in the june 2015 eurosystem staff macroeconomic projections for the euro area, which foresee annual real gdp increasing by 1. 5 % in 2015, 1. 9 % in 2016 and 2. 0 % in 2017. compared with the march 2015 ecb staff macroeconomic projections, the projections for real gdp growth over the projection horizon remain virtually unchanged. while remaining on the downside, the risks surrounding the economic outlook for the euro area have become more balanced on account of our monetary policy decisions and oil price and exchange rate developments. bis central bankers ’ speeches inflation bottomed out at the beginning of the year. according to eurostat ’ s flash estimate, euro area annual hicp inflation was 0. 3 % in may 2015, up from 0. 0 % in april and compared with – 0. 6 % in january. on the basis of the information available and current oil futures prices, annual hicp inflation is expected to remain low in the months ahead and to rise towards the end of the year, also on account of base effects associated with the fall in oil prices in late 2014. supported by the expected economic recovery, the impact of the lower euro exchange rate and the assumption embedded in oil futures markets of somewhat higher oil prices in the years ahead, inflation rates are expected to pick up further during 2016 and 2017. this assessment is also broadly reflected in the june 2015 eurosystem staff macroeconomic projections for the euro area, which foresee annual hicp inflation at 0. 3 % in 2015, 1. 5 % in 2016 and 1. 8 % in 2017. in comparison with the march 2015 ecb staff macroeconomic projections, the inflation projections have been revised upwards for 2015 and remain unchanged for 2016 and 2017. the governing council will continue to monitor closely the risks to the outlook for price developments over the medium term. in this context, we will focus in particular on the passthrough of our monetary policy measures, as well

the ecb – annual inflation less than two, but close to two percent – it is imperative for each economy belonging to this area to ensure that national increases of wages, of unit labour costs and of prices are broadly in line with the euro area average. this is essential. otherwise the economy will lose competitiveness, year after year, and will trigger low growth and low employment. this is also true for cyprus. politis : for the cyprus economy, several organisations ( imf, european commission etc ) list as major threats its big government sector, its current account deficit and the projection for its mid term pension and health costs. with the exception of the first ( current fiscal deficit ) for the others, the european commission can only issue warnings. is the ecb ’ s assessment on the same lines? trichet : at the time when cyprus joined the euro area it featured a relatively sound fiscal position. now the situation is different : the rapid aging of the population ( one of the fastest across eu countries ) and the deficit generated via increases in the public wage bill and social transfers pose very serious structural problems. these have to be addressed by means of a strong fiscal consolidation strategy and an important pension reform to ensure the long - term sustainability of the pension system. as you see, the ecb fully shares the diagnosis of the european commission and of the imf. politis : in your keynote address at the eurofi financial forum 2010 you described the basel iii reform package as a cornerstone intended to put the global financial system on a sounder footing. some academics call the whole basel framework an excuse for mainly big banks and countries that do not want really to take the drastic and effective reform measures needed. can the eu citizens be assured that the new framework ( not just basel iii ) will prevent a financial crisis of a similar of what we experienced two years ago? trichet : on basel concretely : the agreement reached has two great achievements. first, the end results are tough standards. the required common equity has been increased from 2 % to 7 % ; this is an increase by a factor of 3. 5. ( for some institutions, having 1 % capital, it ’ s 7 times bigger ). second, the agreement is global. it encompasses industrial economies as well as emerging economies. overall, i consider that our agreement strikes the right balance between the objective of a very significant strengthening of the resilience of the financial sector while not endangering the progressive consolidation of the recovery, thanks to