council of the ecb. we ’ ll first discuss how and when we stop purchasing assets. only later on in the second stage we ’ ll discuss interest rates. we ’ ve been clear that we expect interest rates to remain at the current levels, meaning very low, for an extended period of time and well past the horizon for asset purchases. well past means well past so that ’ s not a discussion we ’ re having and we really expect interest rates to remain very low for an extended period of time. will the asset purchases go on through september? president draghi said last week when asked, was august next year or middle of summer next year a likely time, he said yes. markets form expectations. we ’ ll have the discussion as policymakers at some point, but that ’ s not something we have discussed so far. the ecb obviously doesn ’ t set market rates, the rates that banks charge to the likes of me and our viewers tonight, but you do monitor the rates that are charged. your reporting has shown that irish banks are consistently charging much higher rates than the eurozone average. why are they charging so much and what can you do about it? as you rightly say, we are not deciding on the rates charged by banks. i ’ m also charged by my 1 / 4 bis central bankers'speeches bank in frankfurt and i have no say on that. what we do is to set the policy rates ; that is a shortterm rate decided by the ecb. i would say that it mainly reflects irish banks are still having some way to go to deal with the legacy of the crisis. they ’ ve been doing good work in terms of being more productive, more efficient. they are doing a good job to get rid of non - performing loans, but that ’ s a journey and it ’ s a long journey. the central bank of ireland, the irish government have been very supportive. there ’ s a whole strategy there but it will take time for irish banks to come back to – totally to normality when it comes to their legacy costs. that has to be reflected somewhere. but the spanish banks also had a property bust and the same problems, but their rates are so much lower. i think it ’ s very difficult to compare different economies here because we are talking of retail rates and the structures are different in spain and in ireland. well, that ’ s an area where we still don ’ t have a homogenous market across the euro

year period of growth slightly above 7 %. the second is in the pre - crisis high - growth phase, when inflation around the middle of a five - year period of growth averaged over 8. 5 %. the third is in the post - crisis period, when rising inflation accompanied the recovery from a growth of 6. 8 % in 2008 – 09, the trough of the crisis, to 8 % in the following year. two important implications for the future of monetary policy can be drawn from these three episodes. first, nirg is not a long - term constant. it can change over relatively short periods of time, as it did from about 7 % to about 8. 5 % in less than a decade, between the first and second episodes. importantly, in the transition out of the crisis, when the growth rate accelerated from its low 6. 7 % in 2008 – 09 to 8 % in 2009 – 10 and, further, to a currently estimated 8. 5 % in 2010 – 11, bis central bankers ’ speeches inflationary pressures quickly became quite strong. this might suggest that nirg is now closer to 8 %. second, the increase in nirg from 7 % to 8. 5 % seems to have been accompanied by a sharp rise in the investment - gdp ( gross domestic product ) ratio and a steady decline in the fiscal deficit - gdp ratio. the former suggests that as new capacity is created in the economy, its ability to grow faster without spurring inflation increases. the latter suggests that for a given rate of growth, the composition of spending also matters. chart 1 : growth and inflation less government borrowing appears to be associated with a rising nirg, perhaps because it creates more space for investment. of course, more analysis of these relationships is warranted, but they do suggest that monetary policy will have to take the overall composition of expenditure into account while assessing nirg, which in turn will influence the policy stance. impact of energy prices for energy - importing economies such as china and india, monetary policy is going to be influenced by global oil price movements as long as oil remains the predominant incremental source of energy. the same arguments hold for other important commodities as well, but energy is likely to be the most important factor, so i shall focus on it. chart 2 demonstrates how important energy prices and their rate of inflation are to domestic inflation. during the economy ’ s pre - crisis high - growth phase, the crude oil price, though rising, was doing so relatively