a reasonable balance between letting automatic stabilisers operate and seeking further consolidation where needed. in some cases, current consolidation ambitions are weak. in order to further boost confidence in the fiscal framework and the economic environment, it is essential that appropriate consolidation plans are implemented in all countries with remaining imbalances. hence, the commitments made in the stability programmes and the requests to further improve fiscal positions, as subsequently agreed in the ecofin council, must be implemented in full. in this respect, the measures should be part of a comprehensive and growth - oriented strategy, which for most countries means putting the focus on both restraining the volume, and reforming the structure, of public expenditure. finally, the outlook for the euro area economy could be significantly improved if governments strengthen their efforts to implement structural reforms in labour and product markets. such reforms are important to ultimately raise the euro area's production potential, improve the flexibility of the economy, and make the euro area more resilient to external shocks. in particular at the current juncture, when economic activity is subdued, taking measures to make the euro area a more attractive place to invest in can contribute substantially to fostering confidence. we are now at your disposal for questions.

volatility in oil markets makes it difficult to forecast short - term inflation developments. however, once some normalisation in these markets has occurred, more fundamental factors should dominate price developments. first, the significant appreciation of the nominal effective exchange rate of the euro over the past year is expected to continue to feed through the economy into consumer prices, via import and producer prices. second, the moderate pace of economic growth should also reduce inflationary pressures, influencing price and cost - setting behaviours. if oil prices moderate in the future, as currently expected by markets, the most likely outcome will be that inflation rates will fall below 2 % in the course of 2003 and remain clearly at levels in line with price stability thereafter. this baseline scenario relies on the assumption that, especially in an environment of subdued economic growth, wage moderation will prevail. in fact, some recent indications suggest more modest wage developments towards the end of last year, but this picture would need to be confirmed in the future. overall, ecb key interest rates have reached levels which are very low. on the basis of the currently available information, this policy stance, while contributing to the preservation of price stability over the medium term, provides some counterbalance to the various factors which are currently having an adverse effect on economic activity. looking ahead, the most likely scenario is that economic growth will gradually recover once the factors contributing to the high economic uncertainty have diminished. while the expected weak economic activity at the beginning of this year will imply low average economic growth in 2003, a rise in quarterly growth rates should materialise in the course of the year. over time, the euro area economy should benefit from a global economic recovery and the prevailing low levels of interest rates, as well as from falling inflation supporting real disposable income and underpinning private consumption growth. however, any judgement on future developments is overshadowed at present by the geopolitical tensions and their potential resolution. monetary policy cannot address this kind of uncertainty. depending on further developments, the governing council stands ready to act decisively and in a timely manner. the prospects for the euro area economy will depend very much on measures taken in other policy areas. as for fiscal policy, adherence of all countries to the framework laid down in the treaty and the stability and growth pact will support stable and sustainable public finances, and will thereby contribute significantly both to confidence and to favourable financing conditions for the private sector. in most cases, the fiscal policy stance implicit in the updated stability programmes strikes