european central bank : press conference – introductory statement introductory statement by mr jean - claude trichet, president of the european central bank, frankfurt am main, 8 march 2007. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to today ’ s press conference. let me report on the outcome of our meeting, which was also attended by mr steinbruck, president of the ecofin council, and commissioner almunia. at today ’ s meeting, we decided to raise the key ecb interest rates by 25 basis points. this decision was taken in view of the upside risks to price stability over the medium term that we have identified through both our economic and monetary analyses. today ’ s decision will contribute to ensuring that medium to longer - term inflation expectations in the euro area remain solidly anchored at levels consistent with price stability. such anchoring is a prerequisite for monetary policy to make an ongoing contribution towards fostering sustainable economic growth and job creation in the euro area. after today ’ s increase, given the favourable economic environment, our monetary policy continues to be on the accommodative side, with the key ecb interest rates moderate, money and credit growth vigorous, and liquidity in the euro area ample by all plausible measures. therefore, looking ahead, acting in a firm and timely manner to ensure price stability in the medium term is warranted. the governing council will monitor very closely all developments so that risks to price stability over the medium term do not materialise. turning first to the economic analysis, according to eurostat ’ s first estimate, the quarter - on - quarter growth rate of real gdp in the euro area for the fourth quarter of 2006 was 0. 9 %, which was above previous expectations. our current assessment is that the quarterly profile of real gdp growth is likely to be somewhat smoother in response to the impact of indirect tax changes in one large euro area country than had originally been anticipated. the strength of real gdp growth in the fourth quarter is thus indicative of ongoing robust growth in the euro area. both domestic demand and exports made significant contributions to real gdp growth, confirming the sustained and broad - based nature of the current expansion. the information on economic activity from various confidence surveys and indicator - based estimates supports the assessment that robust economic growth has continued into 2007. looking ahead, the medium - term outlook for economic activity remains favourable. the conditions are in place for the euro area economy to grow solidly. as regards

ample liquidity, it points to upside risks to price stability over the medium to longer term. monetary developments therefore continue to require very careful monitoring, particularly against the background of a solid expansion in economic activity and continued strong property market developments in many parts of the euro area. to sum up, in assessing price trends it is important to look through any short - term volatility in inflation rates. the relevant horizon for monetary policy is the medium term. risks to the medium - term outlook for price stability remain on the upside, relating in particular to stronger than currently expected wage developments in a context of robust ongoing growth in employment and economic activity. given the vigorous monetary and credit 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 to longer term. the governing council will continue to monitor very closely all developments so that risks to price stability over the medium term do not materialise. this will support the solid anchoring of medium to longer - term inflation expectations in the euro area at levels consistent with price stability. therefore, looking ahead, acting in a firm and timely manner to ensure price stability in the medium term remains warranted. as regards fiscal policy, there is growing confirmation that the favourable cyclical developments led to better than expected budgetary outcomes in 2006 in a number of countries and in the euro area as a whole. however, updated stability programmes foresee only moderate progress with fiscal consolidation in the coming years. in this respect, some countries ’ consolidation targets appear not fully in line with the requirements of the revised stability and growth pact. risks stem in particular from a lack of well - specified and credible measures, notably on the expenditure side of budgets. given the favourable economic environment, the governing council considers it essential that procyclical policies are avoided in all euro area countries and that sufficiently ambitious fiscal consolidation efforts are made in the countries with remaining budgetary imbalances and / or high public debt outstanding. the opportunity should be seized to attain sound public finances within the programme horizons and by 2010 at the latest in all euro area countries. fiscal consolidation that is part of a medium - term - oriented, credible and expenditure - based reform strategy would support longerterm output and employment growth and help prepare for the fiscal impact of population ageing. as regards structural reforms, the european council will discuss the current state of, and future progress in,