european central bank : press conference - introductory statement introductory statement by mr jean - claude trichet, president of the european central bank and mr lucas papademos, vice - president of the european central bank, frankfurt am main, 3 february 2005. * * * ladies and gentlemen, it is our pleasure to welcome you to this press conference. the vice - president and i will now report on the outcome of today ’ s meeting of the governing council of the ecb. all in all, the information which has become available since the last meeting of the governing council means that our assessment of price stability over the medium term is unchanged. while short - term hicp inflation rates remain subject to certain volatilities, particularly in relation to oil prices, there is no significant evidence of underlying domestic inflationary pressures building up in the euro area. accordingly, we have left the key ecb interest rates unchanged at their historically low levels. however, upside risks to price stability over the medium term remain. continued vigilance is therefore of the essence with regard to those risks. i shall now explain our assessment in more detail. turning first to the economic analysis, recent data on economic activity, as well as survey information, suggest ongoing moderate growth in the fourth quarter of 2004 and a broadly unchanged situation around the new year. looking ahead, the conditions remain in place for economic growth to pick up and become more self - sustained in the course of the year. global growth remains solid, providing a favourable environment for euro area exports. on the domestic side, investment is expected to continue to benefit from very favourable financing conditions, improved earnings and greater business efficiency. moreover, consumption growth should develop in line with real disposable income growth. high and volatile oil prices and persistent global imbalances pose downside risks to growth. on the domestic side, reducing uncertainties associated with the extent and pace of fiscal and structural reforms would support consumption, as such uncertainties seem to be limiting private sector expectations of future real disposable income growth. as regards exchange rates, we confirm our position, expressed when the euro rose sharply, that such moves are unwelcome and undesirable for economic growth. turning to consumer prices, annual hicp inflation stood at 2. 4 % in december, up from 2. 2 % in november. data for january are not yet available, but there are indications of a decline from december ’ s inflation rate. over the coming months, volatility in

achieved through various means. take ireland, for example. this country has a higher standard of living than the european average, overtaking the standard of living in france and england. it constitutes an outstanding example of growth and full employment, thanks to the courageous reforms which were implemented with broad - based popular support. another success is denmark, which is de facto in the euro area, with its combination of high but very well managed social protection and a very flexible labour market. it has achieved both growth and full employment under remarkable conditions. p. m. if the maastricht treaty could be rewritten, would you be among those who would prefer the ecb, like its american counterpart, the federal reserve system, to act as a doctor at the bedside of growth and employment, in addition to carrying out its task of policing inflation? j. - c. t. first, the maastricht treaty is not to be rewritten. second, in this respect, it rigorously incorporates the features of french and german law and the laws of the various nations which decided to merge their currencies to create the euro. it was not, therefore, something new. by the way, almost all countries worldwide have adopted a principle of monetary policy whereby the central bank is assigned the task of guaranteeing price stability. p. m. the federal reserve system being, therefore, an exception? j. - c. t. the federal reserve system is not in itself a real exception. whenever my colleague, alan greenspan, speaks, he always says, as we do, that price stability is a necessary condition for sustainable growth and job creation. you will see that he makes this point in most of his speeches. p. m. following the interest rate hike of 1 december 2005, you said, “ we are not engaging, ex ante, in a series of interest rate increases. ” does this mean that you are promising that there will be no further increase in interest rates in the coming months? j. - c. t. as regards future monetary policy, i reiterate what i said on behalf of the governing council following our most recent decision : “ we did not decide “ ex ante ” to engage in a series of interest rate increases. we will in the future take the decisions that will be necessary to deliver price stability, to be credible in delivering price stability over time and to preserve the solid anchoring of inflationary expectations at levels consistent with price stability ”. i