european central bank : press conference – introductory statement introductory statement by mr jean - claude trichet, president of the european central bank, and mr vitor constancio, vice - president of the european central bank, frankfurt am main, 10 october 2010. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. we will now report on the outcome of today ’ s meeting. based on its regular economic and monetary analyses, the governing council continues to view the current key ecb interest rates as appropriate. it therefore decided to leave them unchanged. considering all the new information and analyses which have become available since our meeting on 2 september 2010, we continue to expect price developments to remain moderate over the policy - relevant medium - term horizon. recent economic data are consistent with our expectation that the recovery should proceed at a moderate pace in the second half of this year, with the underlying momentum remaining positive. at the same time, uncertainty is still prevailing. our monetary analysis confirms that inflationary pressures over the medium term remain contained, as suggested by weak money and credit growth. we expect price stability to be maintained over the medium term, thereby supporting the purchasing power of euro area households. inflation expectations remain firmly anchored in line with our aim of keeping inflation rates below, but close to, 2 % over the medium term. the firm anchoring of inflation expectations remains of the essence. overall, the current monetary policy stance remains accommodative. the stance, the provision of liquidity and the allotment modes will be adjusted as appropriate, taking into account the fact that all the non - standard measures taken during the period of acute financial market tensions are fully consistent with our mandate and, by construction, temporary in nature. accordingly, the governing council will continue to monitor all developments over the period ahead very closely. let me now explain our assessment in greater detail, starting with the economic analysis. euro area real gdp grew strongly on a quarterly basis, increasing by 1. 0 % in the second quarter of 2010, supported mainly by domestic demand, but partly reflecting temporary factors. recent statistical releases and survey evidence generally confirm our expectation of a moderation in the second half of this year in the euro area and elsewhere. nevertheless, the positive underlying momentum of the recovery in the euro area remains in place. the global recovery is expected to go on, and this should imply a continued positive impact on the demand for euro area exports. at the same time

moreover, while spreads between different short - term interest rates are still generally narrow, they have been widening somewhat between rates paid on short - term time deposits and overnight deposits. as a result, the annual growth rate of m1 has continued to moderate from high levels, and stood at 7. 7 % in august 2010, while the annual growth rate of other short - term deposits has become less negative. the rise in the annual growth rate of bank loans to the non - financial private sector reflects both a further slight increase in the positive growth of loans to households and a gradually less negative annual growth rate in loans to non - financial corporations. the latest developments are consistent with the lagged response of loan developments to economic activity over the business cycle that was also observed in past cycles. banks have gradually increased the overall size of their balance sheets recently, but the challenge remains for banks to expand the availability of credit to the non - financial sector when demand picks up further. where necessary, to address this challenge, banks should retain earnings, turn to the market to strengthen further their capital bases or take full advantage of government support measures for recapitalisation. to sum up, the current key ecb interest rates remain appropriate. we therefore decided to leave them unchanged. considering all the new information and analyses which have become available since our meeting on 2 september 2010, we continue to expect price developments to remain moderate over the policy - relevant medium - term horizon. recent economic data are consistent with our expectation that the recovery should proceed at a moderate pace in the second half of this year, with the underlying momentum remaining positive. at the same time, uncertainty is still prevailing. a cross - check of the outcome of our economic analysis with that of the monetary analysis confirms that inflationary pressures over the medium term remain contained, as suggested by weak money and credit growth. we expect price stability to be maintained over the medium term, thereby supporting the purchasing power of euro area households. inflation expectations remain firmly anchored in line with our aim of keeping inflation rates below, but close to, 2 % over the medium term. the firm anchoring of inflation expectations remains of the essence. turning to fiscal policies, we take note of the recent announcements made in some euro area countries with regard to measures to tackle the existing fiscal imbalances. indeed, a number of countries have to meet major challenges, and immediate, ambitious and convincing corrective action is required. credible multi - year consolidation plans are needed and will strengthen public confidence in the capacity