upside risks to price stability at medium to longer horizons. monetary developments, therefore, require enhanced monitoring, particularly in the light of strong dynamics in housing markets. to sum up, annual inflation rates are projected to remain elevated in 2006 and 2007, with risks to this outlook continuing to be on the upside. given the dynamism of monetary growth in an environment of already ample liquidity, a cross - check of the outcome of the economic analysis with that of the monetary analysis supports the assessment that upside risks to price stability prevail over the medium term. it is essential that inflation expectations remain firmly anchored at levels consistent with price stability. accordingly, the governing council will exercise strong vigilance so as to ensure that risks to price stability do not materialise, thereby making an ongoing contribution to sustainable economic growth and job creation. in terms of fiscal policy, the overall pace of consolidation is disappointing against the background of the favourable outlook for growth. consolidation targets continue to be at risk, notably in a number of countries with an excessive deficit. the governing council therefore reiterates its position that it is crucial to avoid the mistakes of the past. it also wishes to express its broad agreement with the main fiscal challenges as generally identified by the european commission. these concern, in particular, the need for a rigorous implementation of the revised stability and growth pact with a view to speeding up fiscal consolidation and improving the outlook for fiscal sustainability. this needs to be underpinned by medium term - oriented structural reform strategies and appropriate national fiscal institutions and procedures. finally, reliable compilation and timely reporting of government finance statistics remain essential for the european fiscal framework. meeting these challenges will support confidence in the soundness of public finances and in economic prospects in europe. as regards structural reforms, enhancing the growth potential of the euro area, increasing job opportunities and strengthening the euro area ’ s ability to cope with the challenges of globalisation are among the most demanding economic policy issues of our time. in order to translate the opportunities brought about by globalisation – in terms of higher living standards – into achievements, the euro area would greatly benefit from more flexible labour and product markets. it would also gain from a more favourable business environment and a fully fledged internal market – including in the services sector – that foster innovation, investment and the creation of new firms. indeed, implementing the necessary reforms in a decisive manner would both help to reap the benefits that globalisation and the single market offer our citizens and raise the production capacity of our economy. we

christine lagarde : ecb press conference - introductory statement introductory statement by ms christine lagarde, president of the european central bank, and mr luis de guindos, vice - president of the european central bank, frankfurt am main, 10 march 2022. * * * good afternoon, the vice - president and i welcome you to our press conference. the russian invasion of ukraine is a watershed for europe. the governing council expresses its full support to the people of ukraine. we will ensure smooth liquidity conditions and implement the sanctions decided by the european union and european governments. we will take whatever action is needed to fulfil the ecb ’ s mandate to pursue price stability and to safeguard financial stability. the russia - ukraine war will have a material impact on economic activity and inflation through higher energy and commodity prices, the disruption of international commerce and weaker confidence. the extent of these effects will depend on how the conflict evolves, on the impact of current sanctions and on possible further measures. in recognition of the highly uncertain environment, the governing council considered a range of scenarios in today ’ s meeting. the impact of the russia - ukraine war has to be assessed in the context of solid underlying conditions for the euro area economy, helped by ample policy support. the recovery of the economy is boosted by the fading impact of the omicron coronavirus variant. supply bottlenecks have been showing some signs of easing and the labour market has been improving further. in the baseline of the new staff projections, which incorporate a first assessment of the implications of the war, gdp growth has been revised downwards for the near term, owing to the war in ukraine. the projections foresee the economy growing at 3. 7 per cent in 2022, 2. 8 per cent in 2023 and 1. 6 per cent in 2024. inflation has continued to surprise on the upside because of unexpectedly high energy costs. price rises have also become more broadly based. the baseline for inflation in the new staff projections has been revised upwards significantly, with annual inflation at 5. 1 per cent in 2022, 2. 1 per cent in 2023 and 1. 9 per cent in 2024. inflation excluding food and energy is projected to average 2. 6 per cent in 2022, 1. 8 per cent in 2023 and 1. 9 per cent in 2024, also higher than in the december projections. longer - term inflation expectations across a range of measures have re - anchored at our inflation target