slowdown of the economy, and the associated reduction in inflation risks, for it to act promptly. the private sector also needs to adjust its expectations accordingly. a consequence of the above is that in countries where the private sector, in particular the participants in the goods and labour markets, are less flexible in adjusting their pricing and wage behaviour in the face of exogenous shocks, the central bank will be slower in easing monetary policy when confronted with a slowdown. this might explain some of the differences between monetary policy in the us and the euro area. in the former, where markets are more flexible, the federal reserve may be able to cut interest rates in response to the economic slowdown at an earlier stage, because that slowdown is expected to bring about a rapid adjustment in pricing behaviour and expectations. in the euro area, however, price and wages tend to follow the cycle with a lag, and tend to keep rising for some time even after the slowdown starts. see peersman and smets ( 2001 ). see boivin, giannoni and mojon ( 2009 ). let us consider the most recent example of the start of the easing cycle in the fall of 2008. the euro area economy was projected to slow down in the second half of 2008 already for some time. for instance, in the ecb 2008 spring forecast, the euro area gdp growth was projected to fall from 2. 7 % in 2007 to 1. 8 % in 2008 and 1. 5 % in 2009. however, in spite of the projected slowdown, inflationary pressures continued to rise until the summer of 2008. headline inflation rose to 4 %, on account of strong commodity price pressures. long - term inflation expectations derived from inflation - linked bonds increased in the course of the spring, from levels slightly above 2 % to levels above 2. 5 % in june 2008. shorter term forecasts from consensus, the ecb ’ s survey of professional forecasters ( spf ) and other private sector forecasts, as well as forecasts from international organisations, pointed to an inflation rate above 2 % in 2009. growth in compensation per employee also continued to increase in the second and third quarter of 2008 at a rate above 3 %, in spite of the expected economic slowdown. under these circumstances, a premature interest rate cut would have signalled a passive acceptance of such behaviour, which would have translated into a further misalignment of price and wage expectations with respect to the underlying fundamentals.

new zealand and south africa. in europe, strong public intervention is not envisaged for the time being. it is up to the epc and individual card schemes to create the business rules which are needed for a smooth functioning of sepa for cards. sepa for cards – technical standards business rules are only half the battle for a sepa for cards, as technical standards are needed too. last december the epc published an updated version of the sepa cards standardisation volume. this “ book of requirements ”, as it is now called, builds on the sepa cards framework. the objective of the document is to lay the foundations for the harmonisation of standards in sepa. it provides the basis for the sepa standards that are needed so that “ any sepa card could technically work at any sepa terminal ”. the ecb welcomes the epc ’ s commitment to ensure that the book of requirements continues to develop in close dialogue with stakeholders in the sepa cards market, who are represented in the epc cards stakeholders group established last year. the evolution of the book of requirements will also facilitate and guide the market adoption of the detailed standards that various market initiatives have developed or are developing. this is an important step towards interoperability, security and market access. without it, there is a risk that technical fragmentation would remain or even be reintroduced in europe – something that none of us wants. another prerequisite for sepa for cards is a certification framework that inspires trust, ensures an appropriate and equivalent level of security for cards and terminals, and provides processing relates to the authorisation of card transactions, as well as their subsequent clearing and settlement. “ one - stop shopping ” for manufacturers of cards and terminals. card scheme providers have made significant progress over the past year, and are cooperating in the common approval scheme ( cas ) initiative, and i am looking forward to seeing a clear epc position, especially on governance aspects, in this field. governance is in fact one of the key components in the sepa for cards project : setting requirements and promoting standards is important, without a doubt. but, from a european perspective, it is strategically necessary for europe to take a more coordinated approach towards global standard - setting bodies, such as iso or emvco, and that europe starts to speak with one voice. giving the epc, acting on behalf of the european payments industry, a say in these bodies would be a very good way to achieve this aim.