in real gdp in the second half of this year, with growth rates in line with potential growth in 2003. this delay in the acceleration of economic activity in the euro area broadly corresponds with the world economic outlook, given that the expected pace of the recovery has been scaled down over recent months. sharp declines in stock prices are having negative effects on consumer and investor confidence. consequently, the strength of the upturn in economic activity has become more uncertain, both inside and outside the euro area. at the same time, however, the conditions for a stronger economic recovery in the euro area remain in place. on the domestic side, private consumption should particularly benefit from lower inflation and improved real disposable income, while investment should be supported by low nominal and real market interest rates. finally, the gradual recovery of the global economy is also expected to continue. nevertheless, risks to the economic outlook, both inside and outside the euro area, need to be monitored closely. turning to price developments, in july annual hicp inflation was 1. 9 %, while the inflation rate excluding unprocessed food and energy fell slightly to 2. 5 %, its first decline in 2002. eurostat ’ s flash estimate for august, which indicates that annual hicp inflation increased to 2. 1 %, is fully in line with previous expectations that inflation rates were likely to fluctuate at around 2 % for the remainder of the year. however, the short - term trend is also dependent on oil price developments, which have increased significantly over recent months. looking further ahead, the recent appreciation of the euro exchange rate, as well as the overall economic environment, should contribute to a reduction in consumer price inflation. moreover, services price inflation is expected to moderate somewhat, following particularly strong increases in 2002. however, for inflation rates to come down to levels below 2 % in 2003, as currently projected by most forecasts, it is crucial that oil prices do not escalate and that wage moderation prevails. with respect to nominal wage growth, we have already noted an upward trend over recent years, which continued even when the economy started to slow down. while the information from the latest wage indicators does not signal a further acceleration, wage developments remain a cause for concern, despite the weak cyclical situation. with regard to the devastating floods which have hit three member countries in particular, we deeply regret the substantial loss of life. the overall macroeconomic impact of these floods should be limited and have no lasting effects

european central bank : press conference – introductory statement introductory statement by mr willem f duisenberg, president of the european central bank and mr christian noyer, vice - president of the european central bank, at the press conference, held in frankfurt, 8 november 2001. * * * ladies and gentlemen, the vice - president and i are here to report on the outcome of today's meeting of the governing council of the ecb. the governing council conducted a comprehensive and in - depth examination of monetary and economic developments. against the background of the available evidence, it analysed the implications for the maintenance of price stability in the euro area, taking a forward - looking and medium - term perspective. as a result, the governing council decided to lower the key ecb interest rates by 50 basis points. at this new level, the key ecb interest rates continue to be appropriate to ensure a favourable outlook for price stability over the medium term. in assessing the information which has accumulated over the past few weeks we concluded that inflationary pressures have further diminished. this was particularly apparent from the information under the second pillar of the ecb's monetary policy strategy, while information relating to the first pillar was also judged consistent with today's decision. the governing council considered today's assessment to be in line with available forecasts and its view of economic developments in the period ahead. it is expecting these views to be broadly confirmed by further incoming information on the economic situation. the ecb will publish its own projections in the december issue of the monthly bulletin. let me elaborate somewhat on the assessment provided under the two pillars of the monetary policy strategy of the ecb. with regard to the first pillar, after having grown at a strong pace over the previous few months, m3 growth increased further in september. however, the recent evolution needs to be seen as a reflection of an increased liquidity preference of investors in an environment of a relatively flat yield curve until august, developments in global stock markets and a surge in financial market uncertainty following the terrorist attacks of 11 september. in addition, the growth of credit to the private sector has continued to decline over recent months. overall, despite the acceleration in m3 growth, current monetary developments do not signal risks to price stability in the medium term. we will continue to closely examine the underlying dynamics of monetary growth. regarding the second pillar, much clearer signals of a further reduction of inflationary pressures from the demand side have accumulated over recent weeks. euro area real gdp growth will