peter praet : preserving monetary accommodation in times of normalisation speech by mr peter praet, member of the executive board of the european central bank, at the ubs conference, london, 13 november 2018. * * * introduction in the aftermath of the global financial crisis, central banks have successfully fended off deflationary forces and supported economic recovery. they have brought down policy rates to their effective lower bound and, importantly, have made use of a broad set of unconventional monetary policy measures in pursuit of their statutory objectives. in advanced economies, monetary policies have borne fruit, but their monetary policy cycles clearly differ substantially, reflecting different stages of recovery and degrees of progress towards achieving the central bank ’ s statutory objectives. in a number of places, central banks have already tightened their monetary policy stance ; unconventional monetary policy measures have been wound down and policy rates have been gradually increased. in the euro area, however, significant monetary policy stimulus is still needed to support the further build - up of inflationary pressures and headline inflation developments over the medium term. at the meeting of the ecb ’ s governing council in june, we gave an important signal of a normalisation of our policy instruments. we communicated our anticipation that, subject to incoming data confirming our medium term inflation, we would end net purchases under our asset purchase programme ( app ) after december 2018. today i would like to address our key challenge in normalising our monetary policy instruments : preserving monetary accommodation while switching back from net asset purchases to forward guidance on policy rates as the main instrument to steer our monetary policy stance. while this rotation proceeds, we will continue to operate with multiple, complementary instruments, including our policy of reinvesting the principal payment of securities purchased under the app. the state of the euro area economy following more than five years of increasingly broad - based economic expansion in the euro area, recent developments point to some slowdown in the pace of economic growth. preliminary data show that euro area real gdp expanded by 1. 7 % year on year in the third quarter of 2018, down from 2. 2 % in the second quarter. the slowdown in euro area economic growth since the start of the year primarily reflects a loss of momentum in global activity, amid heightened policy uncertainty and tighter financial conditions globally. while some retreat from the strong growth of 2017 was to be expected, it was compounded by short - term country - specific or sector - specific factors in the euro area. euro area domestic demand has however remained resili

start in any case not later than the economic recovery. in 2011 the consolidation efforts should be stepped up. to correct the envisaged large fiscal imbalances of euro area countries, structural consolidation efforts will need to exceed significantly the benchmark of 0. 5 % of gdp per annum set in the stability and growth pact. in countries with high deficits and / or debt ratios the annual structural adjustment should reach at least 1 % of gdp. turning to structural policies, there is a need to intensify efforts to support potential growth in the euro area. given the negative impact of the financial crisis on employment, investment and the capital stock, it is crucial to accelerate the implementation of necessary structural reforms. in particular, product market reforms are required to foster competition and speed up restructuring and productivity growth. furthermore, labour market reforms need to facilitate appropriate wage - setting and labour mobility across sectors and regions. at the same time, many of the policy measures taken in recent months with a view to supporting specific segments of the economy should be phased out in a timely manner. it is crucial that the focus is now on strengthening the adjustment capacity and flexibility of the euro area economy in line with the principle of an open market economy and free competition. we are now at your disposal for questions.