ll have in the governing council but it ’ s clear that the deflation risk is now off the table and that is also being acknowledged by financial markets, by money market rates and even at the longer end of the curve. term premium has increased substantially since september and part of it is related to the deflation risk being now clearly off the table from the market ’ s standpoint. if you do not remove that reference to lower rates, do you not risk losing credibility? one important consideration is to keep our forward guidance in line with facts. we don ’ t want to let a gap emerge between our forward guidance and our own expectation based on facts. the credibility of our forward guidance depends on it being adjusted to reflect facts. do you think such a gap is starting to open up now? no, i don ’ t think so. it ’ s an ongoing discussion. in the last meeting, the governing council has reassessed its perception of the balance of economic risk. different governing council members were coming from different places and there had been public statements. the governing council converged on the unanimous view that risks are still tilted to the downside but they are rebalancing and that ’ s a reflection of the continuous reassessment of risk by the governing council. a view has emerged that when it comes to normalising policy it ’ s better to be slightly late than too early? i don ’ t see that argument as being very convincing when it comes to communication. the communication of the governing council has to remain in line with facts and an evolving reality. there ’ s always the temptation of gradualism in monetary policy. too much gradualism in monetary policy bears the risk of larger market adjustments when the decision is eventually taken. that ’ s the way i would see it. what do you mean by gradualism? it ’ s the risk that our communication deviates from economic reality, which could cause a more forceful market adjustment down the road. i don ’ t see much merit in this. in particular, because that ’ s sometime the argument, we should certainly not put too much weight on political timelines 2 / 6 bis central bankers'speeches – elections and the like. we do monetary policy based on facts, not political outcomes. some measures of market volatility at multi - year lows : is the market being complacent and how does that affect your judgment? what are the banana skins on the road ahead? market complacency is a

risk management conditions. 5 / 6 bis central bankers'speeches monday will be the day for political decisions. i don ’ t see a discussion starting in the governing council on pspp inclusion before all the steps are taken on the european side and the imf side, that is, before decisions are taken in the esm board of governors and imf executive board. do you need the imf on board or just need an up or down decision? we ’ ll take our decision independently and we don ’ t formally need the imf to be on board but it would clearly give us comfort if the imf was on board in terms of the credibility of the debt measures. what may be the impact of the french elections economic growth? there is less uncertainty, which is good in the short term. is it a game changer for growth in the short term? i ’ m not sure. the french recovery was already quite robust before the election. but it does change the longer term outlook because it increases the chance of reforms that could turn the cyclical recovery into a structural recovery, first at the level of france and then at the level of the euro area as a whole. 6 / 6 bis central bankers'speeches