, or conceptual differences? the difference is mainly related to the economic circumstances and, to be more precise, to differences in the assessments about the economic outlook and in particular the outlook for price stability. in the us, the policy stance changed and the decision to preannounce a measured increase in interest rates was made at a time when interest rates were at the very low level of 1 per cent and had stayed at that level for a considerable period and also at a time when it was assessed that inflationary pressures were building up on both the demand and the supply sides of the american economy. our case is somewhat different. first, we had a higher level of interest rates when the decision was taken to change the monetary policy stance. second, our assessment about the outlook for price stability is that inflation is expected to stay above 2 per cent for a period of time but it is expected to moderate gradually.. in the absence of second - round effects, the relatively modest increase in unit labour costs, partly related to the fact that the pace of the recovery is moderate and there is still an output gap and a high rate of unemployment, is expected to help contain inflationary pressures. but several and significant upside risks surround this assessment. it is therefore important that second - round effects of oil prices are avoided and that monetary policy helps to minimise the likelihood that other risks materialise. from a conceptual point of view, i agree that monetary policy predictability is a desirable feature that enhances policy effectiveness. however, predictability does not require, in general, giving explicit signals or pre - announcing the medium - term evolution of the monetary policy stance. what is your perspective for the long - term growth potential of the eurozone? have you lowered your estimates? in the past, we reported a range of estimates for potential growth of 2 to 2. 5 per cent in the euro area that had been obtained by academic research. there is a risk that, unless there are changes in policies – more reforms in labour and product markets - as well as in the behaviour of private economic agents, this range may have to be revised downwards. but it is not our working assumption that no action will be taken to strengthen potential growth in the euro area. to cut a long story short, the main way that potential growth could increase is through policies that boost productivity growth and raise labour utilisation by increasing the average hours worked and the participation rate in the labour market and by making this market more flexible and adaptable. i

the coming year is mainly based on the projected evolution of internal demand. which effect is stronger - the impact of higher short - term rates on growth, or the beneficial effects of low long - term rates? well, it depends of course on the term - structure of debt and the proportion of long - term debt with variable rates. but the general point that i would like to emphasise is that although a higher level of short term rates can be expected to dampen growth in principle, it may not dampen growth in practice because of the influence of other factors, including those that determine the functioning of labour markets and productivity growth. could it be that the recent move by the ecb represents a case where increase interest rates might stimulate growth? i would agree with this. public perceptions and expectations of future inflation should be favourably influenced by a change in the monetary policy stance that aims at preserving price stability. it [ a higher level of interest rates ] could foster expectations of lower inflation and higher real disposable incomes, and increase confidence, particularly in countries where public perceptions of current inflation are less favourable than actual inflation and financial markets ’ inflation expectations. [ so ] you expect the adjustment to higher interest rates to be orderly? your question suggests that it is a certainty that higher interest rates are coming. i think that we have clarified that we have not decided, ex - ante, to engage in a series of interest rate increases. so i will answer the question in a general way, as a hypothetical question on whether an evolution of interest rates towards a higher level will be orderly? as far as policy rates [ set by central banks ] are concerned, it is important that any future changes are well understood by the markets and the public and are predictable. as regards changes in market rates, particularly potential adjustments in long - term rates partly in response to a change in the monetary policy stance, i would say that the likely scenario would be one of an orderly adjustment, although the relationships between long - term and short - term rates are complex. although there is a risk of an abrupt correction in the level of long - term interest rates as a result of the impact of other developments, this is not the likely outcome on the basis of currently available information. is there a risk of house price bubbles bursting? it is always difficult to identify whether property price rises are indicative of a bubble because property prices are influenced by changes in fundamentals as well as by speculative behaviour. we know that in a number of