while our measures have clearly played a decisive role in keeping inflation expectations anchored and have contributed to an improved inflation outlook, an ample degree of monetary accommodation therefore remains necessary to secure a return of inflation rates towards levels that are below, but close to, 2 % over the medium term. how is our monetary policy likely to evolve in the foreseeable future? our monetary policy stance is currently determined by the combination and mutual interaction of the asset purchase programme ( app ), our policy rates and our forward guidance on each of these tools. additional stimulus is provided by the targeted longer - term refinancing operations ( tltros ), which will remain outstanding for the next three years. once our key interest rates had reached exceptionally low levels, the app became for all practical purposes the primary policy tool for calibrating our monetary policy stance. this is why, 1 / 3 bis central bankers'speeches since january 2015, we have been signalling the traditionally tight connection between the ecb ’ s monetary policy and the price stability objective by linking an assessment of the medium - term outlook for inflation to the size and duration of our net asset purchases. accordingly, we have consistently communicated our intention to continue with our chosen pace of monthly net purchases until we see “ a sustained adjustment in the path of inflation consistent with our inflation aim ”. in addition, the pledge to reinvest the proceeds from the principal payments that accrue from the maturing securities in our portfolio should be seen as a necessary complement to the net asset purchases. forward guidance on both policy rates and the app plays a key role in determining our monetary policy stance. its function has evolved significantly over time. in july 2013, when we announced for the first time that we expected our “ key interest rates to remain at present or lower levels for an extended period of time ”, forward guidance on interest rates was intended as a protective measure to insulate the euro area money market from the global financial turmoil that had followed the “ taper tantrum ” a few weeks earlier. as the macroeconomic environment deteriorated in late 2013 and early 2014, our policy needed to become distinctly more accommodative, and forward guidance turned into a vehicle for easing the monetary policy stance. forward guidance has not taken the same form across all major economies, differing in terms of both its degree of conditionality and the instruments to which it is attached in the euro area, since the app has been in place, forward guidance has been extended to key parameters of our

mr duisenberg discusses the ongoing dialogue on monetary policy, the overall economic situation and other activities of the eurosystem introductory statement by dr willem f duisenberg, president of the european central bank, at the hearing before the committee on economic and monetary affairs of the european parliament, brussels, on 20 march 2000. * * * it is my pleasure to continue today our ongoing dialogue on monetary policy, the overall economic situation and other activities of the eurosystem. since our previous hearing in november, the european economic outlook has brightened further, while, at the same time, the balance of risks to price stability has shifted upwards owing, in particular, to external factors. against this background, the decisions of the governing council of the ecb to raise interest rates in early february and last week, as well as the reasoning behind these steps, are at the centre of my presentation today. moreover, i should like to touch upon the overall european economic environment. finally, i shall briefly turn to some other activities of the eurosystem which might be of particular interest to you. 1. current economic developments and prospects as you are aware, the governing council of the ecb decided on 3 february and 16 march 2000 to increase the three main ecb interest rates. these two decisions followed the interest rate decision taken on 4 november 1999. whereas the interest rates were increased by 50 basis points in november 1999, on the past two occasions the main refinancing rate and the rates on the marginal lending facility and on the deposit facility were each increased by 25 basis points, so that they now stand at 3. 50 %, 4. 50 % and 2. 50 % respectively. all three decisions were taken in the context of the monetary policy strategy of the eurosystem to address upside risks to future price stability in the euro area. both pillars of the monetary policy strategy indicated that the balance of risks to price stability in the medium term had been shifting upward in late 1999 and early 2000. starting with monetary developments in the context of the first pillar, the three - month average of annual m3 growth exceeded the reference value throughout 1999 and in january 2000. together with the continued strong expansion, at annual rates of around 10 %, of credit granted to the private sector, this signalled that liquidity in the euro area is ample, contributing to upside risks to price stability in the medium term. in the context of the first pillar, let me briefly take up the issue of the reference value for monetary growth