benoit cœure : interview in gazeta wyborcza interview with mr benoit cœure, member of the executive board of the european central bank, in gazeta wyborcza, conducted by mr leszek baj on 16 may 2014. * * * gazeta wyborcza : is there a recovery in europe? on the one hand, the growth of the german economy exceeds 2 %. on the other, in several countries gdp is contracting, and some of the larger economies, such as the french, spanish or italian economies, are still lagging behind. benoit cœure : we are definitely looking at a recovery. this is good news. but the latest gdp figures have confirmed that this recovery is moderate and uneven. at the same time, inflation is low. is there a risk of deflation in the euro area? we consider the risk of deflation to be very low. but the rate of inflation – 0. 7 % in the euro area in april – is rather far from our inflation objective consistent with price stability, which is about 2 %. for us at the ecb, there are two key questions at the moment. first, what are the risks to economic growth and is there a risk that this growth won ’ t be sustainable? second, it will be important to know whether this period of low inflation won ’ t be excessively prolonged. these are the elements that we will consider when setting our monetary policy. can the ecb take action then? is it going to support the european economy and try to push inflation up a little? if the uneven pace of economic recovery in the euro area is confirmed and if we see a risk of inflation being too low for too long, we can take action in june. we can act in various ways, depending on the situation. at present, however, it is too early to say what exactly we ’ re going to do. a lot depends on the forthcoming economic data and on our staff growth and inflation projections, which are to be released in june. your room for manoeuvre is limited as interest rates are already very low : the key rate is only 0. 25 %. they are low but they can still go lower. are negative interest rates in the euro area possible? negative rates are one of the instruments available to us. they have been discussed extensively by the governing council. we are technically and legally prepared for such a possibility. and market participants are well aware that

staff macroeconomic projections indicate continued progress in reducing fiscal imbalances in the euro area. the aggregate euro area general government deficit is expected to have declined to 3. 2 % of gdp in 2013 and is projected to bis central bankers ’ speeches be reduced further to 2. 7 % of gdp this year. general government debt is projected to peak at 93. 5 % of gdp in 2014, before declining slightly in 2015. looking ahead, euro area countries should not unravel past consolidation efforts and should put high government debt ratios on a downward trajectory over the medium term. fiscal strategies should be in line with the stability and growth pact and should ensure a growth - friendly composition of consolidation which combines improving the quality and efficiency of public services with minimising distortionary effects of taxation. national authorities should also continue with the decisive implementation of structural reforms in all euro area countries. these reforms should aim, in particular, to make it easier to do business and to boost employment, thus enhancing the euro area ’ s growth potential and reducing unemployment in the euro area countries. to this end, the governing council welcomes the european commission ’ s communication of yesterday on the prevention and correction of macroeconomic imbalances and on the excessive deficit procedure. looking ahead, it is key that the macroeconomic surveillance framework in the euro area, which was significantly strengthened in the wake of the sovereign debt crisis, is implemented fully and in a consistent manner. we are now at your disposal for questions. bis central bankers ’ speeches