and undertake structural reforms, national governments retain the key powers to improve the performance of their economies. if the terms of the stability and growth pact are adhered to, there is sufficient flexibility to allow automatic stabilisers to work in the event of cyclical fluctuations. together with the social partners, governments have a key responsibility to act decisively to ease the unemployment problem in europe. structural reforms provide the only means of achieving lasting reductions in unemployment, preparing for the ageing of the population and reducing the burden of government debt.

european central bank : press conference - introductory statement introductory statement by mr willem f duisenberg, president of the european central bank and mr lucas papademos, vice - president of the european central bank, at the press conference held in frankfurt, 10 july 2003. * * * ladies and gentlemen, the vice - president and i will now report on the outcome of today ’ s meeting of the governing council of the ecb, which was also attended by the president of the ecofin council, mr tremonti. following our regular economic and monetary analysis, we have concluded that the current monetary policy stance is appropriate in view of the favourable outlook for price stability over the medium term. accordingly, we have decided to leave the key ecb interest rates unchanged. interest rates in the euro area are low by historical standards, both in nominal and real terms, thus lending support to economic activity and helping to safeguard against downside risks to economic growth. the governing council will continue to monitor carefully all factors that might affect this assessment. allow me to explain our assessment in detail. in the context of our economic analysis, the latest data and information continue to suggest that economic growth in the euro area remained subdued in the second quarter of the year, after virtually stagnating in the first quarter. the indicators available broadly point to a stabilisation of activity but there are no signs as yet of an underlying strengthening in production and confidence. at the same time, financial market developments seem to reflect a somewhat more optimistic assessment of the economic outlook both inside and outside the euro area. on the whole, we continue to expect a gradual strengthening of economic activity in the euro area. this should be supported by lower inflation and thus higher real disposable income, the low level of interest rates, and a recovery in external demand for euro area goods and services. this assessment is in line with all available forecasts and projections. nevertheless, downside risks to this main scenario are still relevant. while concerns over the sars virus have faded, there are risks relating in particular to the accumulation of macroeconomic imbalances outside the euro area and to the extent of the adjustment still needed in the euro area corporate sector to enhance productivity and profitability. turning to price developments, the outlook over the medium term remains favourable. for the remainder of this year, annual hicp inflation rates are expected to fluctuate around the current level of 2 %, the rate recently estimated by eurostat for june. in early 2004