and this is capping the demand for u. s. exports. on the brighter side, some of these headwinds appear to be subsiding. employment growth has picked up somewhat, which should eventually lead to faster household formation and more demand for housing. u. s. banks are healthier so that credit conditions, while still tight, are gradually easing. and, households appear quite far along in the deleveraging process by a number of important measures. for example, the ratio of household debt service relative to income is back to levels last seen in the early 1990s. for these reasons, i expect that growth will gradually strengthen over the next few years. nevertheless, significant downside risks remain, especially those related to the challenges in europe and how the potential “ fiscal cliff ” in the united states will be resolved after the fall elections. even if these risks do not materialize, i anticipate only slow progress toward full employment. bis central bankers ’ speeches on the inflation side, in recent years our forecasts have been noticeably more accurate than on the growth side, and we have succeeded in delivering inflation very close to our 2 percent price stability objective. through march, as measured by the personal consumption expenditures deflator, overall consumer prices have risen 2. 1 percent over the past 12 months, and prices excluding food and energy have risen 2. 0 percent. but price trends have been a bit stickier than one might have anticipated given the large amount of slack in the economy. to some degree, this likely reflects the anchoring exerted by stable inflation expectations. but some of the price pressures can be attributed to other, more temporary, factors : higher oil and gasoline prices and their pass - through into the costs of other goods and services. upward pressure on imputed homeowners rents due to increased demand for rental housing. higher import prices for goods, such as apparel. this reflects many factors including commodity prices pressures and higher wage inflation in countries such as china. some of these upward pressures on inflation appear to be fading. oil and gasoline prices have fallen in recent months. apparel price inflation should gradually ease, given the sharp drop seen in cotton prices. owners ’ equivalent rent should also eventually stabilize as multi - family construction picks up and programs that shift real estate owned by banks to investors so they can be rented gear up. more generally, there are several reasons to think that inflation will remain moderate and close to our objective. first, and most obviously, the economy continues to

jean - claude trichet : creating an integrated market for the euro area speech by mr jean - claude trichet, president of the european central bank, at the conference “ sepa summit ” at the euro finance week, frankfurt am main, 13 november 2006. * * * ladies and gentlemen, it gives me great pleasure to welcome you to this conference on the single euro payments area ( sepa ). the ecb is committed to the success of the sepa project and therefore decided to contribute to the organisation of this sepa summit in frankfurt. i am pleased that we could attract some of the key decision - makers in europe ( and beyond ) to this two - day event. i welcome mr mccreevy, commissioner for the internal market, who will share his views on the developments in the creation of an internal market in the field of payments. i also welcome the members of the two panels this afternoon. today ’ s conference is an excellent opportunity to discuss the opportunities that sepa and, more generally, financial integration offer for europe. on this occasion, the ecb is also distributing for the first time its brochure on sepa, which is intended to provide an informative overview of the project, also for those not involved in this issue on daily basis. our main message is that sepa will only become a reality when all euro payments in the euro area are treated as domestic payments and the current differentiation between national and cross - border payments disappears. i am aware that this calls for everyone to make substantial efforts, as it requires not only the alignment of national practices of the banking industry, but also changes in habits from economic actors in all euro area countries. indeed, the sepa project is – in ambition and size comparable with the changeover to the euro banknotes and coins, although the logistics are quite different. sepa could be seen as an important historical step in the unification of europe after the introduction of the euro banknotes and coins. the progress with the sepa project that has been achieved up to now by the industry is impressive. looking back on the discussions on improving cross - border retail payments less than a decade ago, it was surely difficult to imagine that such a remarkable market - led movement called sepa would be achieved to foster financial integration. the sepa project has activated a real modernisation process which, in turn, will generate other adjustments. it is thanks to many individuals, many of whom are here today, who have continuously driven the project, that