jean - claude trichet : the development of euro area statistics from an ecb perspective speech by mr jean - claude trichet, president of the european central bank, delivered at the third ecb conference on statistics, frankfurt am main, 4 - 5 may 2006. * * * colleagues, fellow central bankers, ladies and gentlemen, it is a pleasure for me to address you on the occasion of the closure of the third ecb conference on statistics. with this conference, we have continued our biennial tradition of holding a dialogue between the compilers of statistics and policymakers, academics and other users on the development of statistical requirements. this tradition was started four years ago by eugenio domingo solans, the first ecb executive board member responsible for statistics, who left the ecb in may 2004 and sadly passed away soon afterwards. the subject of this conference has been financial statistics for a global economy, and i would like to use this occasion to share with you some reflections upon the four themes discussed during this conference, namely : 1. are financial statistics good enough to capture globalisation? 2. what are the challenges for national data collection in a global world? 3. which are the statistical implications of financial stability and financial integration? and finally 4. what can we say on global statistical governance? i will obviously focus on the necessary development of euro area statistics and i would like to begin with a brief review of the recent developments in these statistics. recent developments in euro area statistics an evaluation of current euro area statistics should start with three observations. first, official statistics provide the foundation for both the economic and the monetary analysis of the ecb and therefore for its monetary policy. in addition, they are indispensable for the other functions of the ecb, for other economic policy - making in europe and for a smooth functioning of the financial system. this also means that high demands are placed on these statistics. second, it is still less than a decade ago that the statistical requirements for the european economic and monetary union were agreed and that the first euro area statistics became available. it can now be concluded that the compilers of statistics in europe have gone a long way towards harmonising their national statistics and meeting the requirements in a relatively short period of time, and i would like to compliment them on this achievement. third, this progress has been possible thanks to excellent cooperation within europe ’ s statistical community, which consists of national central banks ( ncbs ), national statistical institutes ( nsis ), eurostat

’ perceptions of structural, supply - side differences, and their implications for relative future corporate earnings growth, than by relative macroeconomic policies. no doubt at some point such perceptions will change - or the anticipated differences in future earnings growth be discounted by the change in asset prices, including the effect of exchange rates. there are some tentative signs that this may be beginning to happen. but in the meantime it is not at all clear that there is much that we could do - even if we wanted to - to weaken sterling against the euro by marginal changes in short - term interest rates. as it is our interest rate differential over the euro zone has halved since the euro started, while our exchange rate against the euro has appreciated by around 15 %. we do already, of course, take full account of the exchange rate - and other prices - in both our forecasts and our policy decisions. indeed, it was partly to avoid pushing sterling higher and so aggravating the imbalance within the economy, when we were not wholly convinced that we needed to take that risk in order to achieve the inflation target, that the committee refrained from further monetary tightening over the past eight months. but looking ahead the risks and uncertainties are such that it would be unrealistic to suppose that we can altogether exclude the need for further tightening at some point. leaving on one side possible, though not necessarily likely, international developments outside our control - a hard landing in the us, for example, or a precipitate realignment of exchange rates, or a further spike in the oil price - there are two major uncertainties. the first is the familiar uncertainty relating to the path of overall demand growth. on almost any basis, we start from a position in which the economy as a whole is operating close to capacity. that is reflected in the evident tightness of the labour market, including increasing evidence of skills shortages. if we are to avoid a potentially sharp reversal in earnings growth and accelerating inflation, we need to see a slowdown in the rate of domestic private sector demand growth to accommodate not only the stabilisation of our external current account balance but also the public sector expenditure growth which the chancellor has already announced, not to mention whatever he may be planning to announce tomorrow. there are signs that this slowdown in private sector demand growth may be beginning to happen, but that is certainly not yet assured - and over - generous tax cuts would not help. i must tell you that i am surprised by the