and david gordon ( 1983 ), “ a positive theory of monetary policy in a natural rate model ”, journal of political economy, vol. 91, pp. 589 - 610 ; kenneth rogoff ( 1985 ), “ the optimal degree of commitment to and intermediate monetary target ”, quarterly journal of economics, vol. 100, pp. 1169 - 1189. antonio fatas, ilian mihov and andrew rose ( 2004 ), “ quantitative goals for monetary policy ”, working paper, available at http : / / www. insead. fr / % 7efatas / quant. pdf. further evidence on the stability and anchoring properties of expectations is provided in efrem castelnuovo, diego rodriguez - palenzuela and sergio nicoletti - altimari ( 2003 ) in “ definition of price stability, range and point inflation targets : the anchoring of long - term inflation expectations ”, ecb working paper no 273. richard clarida, jordi gali and mark gertler ( 1999 ) provide extensive discussion of the so - called “ taylor principle ” in “ the science of monetary policy : a new keynesian perspective ”, journal of economic literature, american economic association, vol. 37 ( 4 ), pp. 1661 - 1707. these reflections might inspire two questions. the first is : how did the new european monetary regime successfully impose itself in the broad perceptions of the public? and the second is : to which kind of new challenges and new battles should we be prepared? let me try to respond to these two questions. the transition to economic and monetary union how expectations react to a major change in policy regime is still an issue of contention. 20 years ago, the fathers of the rational expectations revolution espoused an optimistic position : if an institutional change – even an abrupt one – is sufficiently credible, expectations will focus instantly on the new equilibrium. other scholars are more inclined to think that instant refocusing is unlikely. agents should be expected to learn gradually about the new regime, and probe and test it with the benefit of time. the extraordinary episode of the convergence towards economic and monetary union in europe in the second half of the 1990s offers a laboratory case for discriminating between these two hypotheses. the maastricht treaty came into force in november 1993. its fundamental inspiration was the need to ensure that participants in emu are like - minded in their pursuit of stability in economic and monetary affairs

european central bank : press conference - introductory statement introductory statement by mr willem f duisenberg, president of the european central bank and mr christian noyer, vice - president of the european central bank, at the press conference, held in frankfurt, 2 may 2002. * * * ladies and gentlemen, the vice - president and i will now report on the outcome of today's meeting of the governing council of the ecb. the governing council comprehensively examined monetary, financial and economic developments and also considered the accumulated changes in the economic outlook since its decision to lower the key ecb interest rates in november 2001. we concluded that the prospects for price stability appear to be somewhat less favourable than they were towards the end of last year. at the same time, we recognised that the economic outlook remains subject to uncertainties and that price developments partly reflect the influence of specific temporary factors. accordingly, we decided to leave the key ecb interest rates unchanged. starting with the analysis under the first pillar of our monetary policy strategy, the three - month average of the annual growth rates of m3 decreased to 7. 5 % in the period from january to march 2002, down from 7. 8 % in the period from december 2001 to february 2002. the high annual growth rate of m3 continues to reflect the portfolio shifts to liquid positions which occurred last autumn. in the meantime there has been some normalisation in the development of m3, as indicated by the slowdown in its short - term dynamics in early 2002. the annual rate of growth of loans to the private sector also continued to decline in march. however, m3 growth has only slowed relatively recently and, for the time being, the reversal of built - up liquidity is proceeding only slowly. as regards the second pillar, our expectations for a rebound in real gdp growth in the euro area have been confirmed by recently published forecasts of international organisations, which all paint a similar picture. while the recovery in 2002 is expected to initially proceed at a gradual pace, real gdp growth rates in the euro area should again be in line with potential growth later this year and solid growth rates should be attainable by 2003. business confidence has considerably improved in the euro area over the past few months and the conditions for a sustained upswing in domestic demand continue to be in place, including favourable financing conditions. the more positive international environment should also help stimulate euro area exports, thereby fuelling aggregate demand in the euro area. finally, sound fundamentals and the absence of major imbalance