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, 4 november 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. taking into account all the new information and analyses which have become available since our meeting on 7 october 2010, we continue to expect price developments to remain moderate over the policy - relevant medium - term horizon. recent economic data are consistent with our assessment that the underlying momentum of the recovery remains positive. at the same time, uncertainty is prevailing. our monetary analysis confirms that inflationary pressures over the medium term remain contained. 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. recent data releases and survey evidence generally confirm our view that the positive underlying momentum of the economic recovery in the euro area remains in place. in line with previous expectations, this implies ongoing real gdp growth in the second half of this year. the global recovery is expected to proceed, and this should imply a continued positive impact on the demand for euro area exports. at the same time, private sector domestic demand should contribute to growth, supported by the accommodative monetary policy stance and the measures adopted to restore the functioning of the financial system. however, the recovery in activity is expected to be dampened by the process of balance sheet adjustment in various sectors.

turning point was reached earlier in 2010. this would be consistent with the lagged response of loan developments to economic activity over the business cycle that was also observed in past cycles. the annual growth rate of loans to households stood at 2. 8 % in september and thereby remained at levels seen in previous months. banks have continued to gradually increase the weight of credit to the private sector in the overall size of their balance sheets, but the challenge remains to expand the availability of such credit 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. taking into account all the new information and analyses which have become available since our meeting on 7 october 2010, we continue to expect price developments to remain moderate over the policy - relevant medium - term horizon. recent economic data are consistent with our assessment that the underlying momentum of the recovery remains positive. at the same time, uncertainty is 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. 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, there is a clear need to strengthen public confidence in the capacity of governments to return to sustainable public finances, reduce risk premia in interest rates and thus support sustainable growth over the medium term. to this end, it is essential that countries pursue credible multi - year consolidation plans and fully implement the planned consolidation measures. in their 2011 budgets, they need to specify credible fiscal adjustment measures, focusing on the expenditure side. any positive fiscal developments that may emerge, reflecting factors such as a more favourable than expected environment, should be exploited to make faster progress with fiscal consolidation. the urgent implementation of far - reaching structural reforms is essential to enhance the prospects for higher sustainable growth. major reforms are particularly necessary in those countries that have experienced a loss of competitiveness in the past or that are suffering from high fiscal and external deficits. the removal of labour market rigidities and the strengthening of productivity growth would further