christian noyer : there will be no break - up of the euro area – interview in sud ouest interview with mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, in sud ouest, bordeaux, conducted by mr bernard broustet on 17 january 2011. * * * sud ouest : how is our economy faring? christian noyer : the economy is picking up. the third quarter of 2010 was slightly disappointing, but the fourth was better, with estimated growth of 0. 6 %. this trend is expected to continue in early 2011, even though a number of factors call for caution : the automobile sector could slow down due to the phasing out of the scrappage scheme, and the fiscal retrenchment measures implemented in some european countries may weigh on demand. but, all in all, growth is there. sud ouest : will household consumption, which is the main driver of growth in france, be impacted by higher inflation? christian noyer : the surge in inflation that we are now observing at the start of year can be ascribed to higher energy and commodity prices. current price levels appear particularly high when compared to the exceptionally low levels seen at end - 2009. this difference will no doubt become less marked in the coming months. given the unemployment rate and the still low capacity utilisation rate, i think that it is unlikely that the rise in commodity prices could result in second round effects in our economy. nonetheless, higher prices are temporarily weighing on household purchasing power and we must remain vigilant. sud ouest : might the speculative attacks on the some countries ’ sovereign debt and concerns over the euro ’ s future dampen consumption and investment? christian noyer : no, there are no grounds for concern. europe has shown over the past few months that it is capable of rallying together and providing effective and innovative solutions for countries that fall prey to speculative forces. sud ouest : but it is evident that this is not enough to deter investors from attacking the sovereign debts of some countries … christian noyer : at present, these attacks are centred on the countries of southern europe. markets tend to tar with the same brush all the countries perceived as the most fragile in the euro area, whereas their situations differ considerably. the sovereign debt dynamics of some non - european g7 countries are more worrying that those of many euro area countries. sud ouest : aren ’ t speculators betting on a

spillovers that affect consumer prices primarily by lowering import price inflation. 3 chart 8 shows that most of the downward pressure on swiss inflation is attributable to these international spillovers. however, as can be seen in the chart, domestic price components have shifted down as well. this harks back to the flexibility of swiss companies, which i referred to earlier. in particular, those swiss companies that compete in markets for imported goods have lowered their prices in order to maintain competitiveness in the wake of the exchange rate appreciation. such price cuts play an important role in restoring the swiss economy ’ s price competitiveness over the medium term. they are thus part of the adjustment process in response to the sudden exchange rate appreciation. that such a process can be painful for some of the companies directly involved goes without saying. for this year, we expect consumer price inflation to average about – 1. 2 %. we think that the inflation rate will reach its trough this quarter. for 2016, we expect average inflation of −0. 5 %. as you can see from the chart, inflation will move back into positive territory in early 2017. these forecasts assume that the three - month libor remains at – 0. 75 % over the entire forecast horizon, that the brent crude oil price remains at usd 50 per barrel and that the swiss franc weakens. again, our forecasts show that the current period of negative inflation is temporary. nevertheless, even temporarily negative inflation rates are undesirable. yet they cannot always be avoided – especially during phases of strong exchange rate appreciation. what matters is that inflation expectations remain firmly anchored and that monetary policy is able to ensure medium - term price stability. medium and long - term inflation expectations are still positive. this can be seen in various surveys of inflation expectations, and is confirmed by discussions between the snb ’ s delegates for regional economic relations and company representatives from different sectors of the economy. thus, we do not expect sustained negative inflation, let alone a deflationary spiral. concluding remarks this brings me to the end of my speech. earlier this year, the snb took some far - reaching decisions : it discontinued the minimum exchange rate against the euro, and lowered the negative interest rate on sight deposits significantly into negative territory. these measures were necessary to promote adequate monetary conditions for the swiss economy, and to ensure the snb ’ s ability to provide medium - term price stability in the future. since mid - january this year, the snb ’