in demand as containment 2 / 4 bis central bankers'speeches measures are gradually lifted. this assessment is broadly reflected in the baseline scenario of the march 2021 ecb staff macroeconomic projections for the euro area. these projections foresee annual real gdp growth at 4. 0 per cent in 2021, 4. 1 per cent in 2022 and 2. 1 per cent in 2023. compared with the december 2020 eurosystem staff macroeconomic projections, the outlook for economic activity is broadly unchanged. overall, the risks surrounding the euro area growth outlook over the medium term have become more balanced, although downside risks remain in the near term. on the one hand, better prospects for global demand, bolstered by the sizeable fiscal stimulus, and the progress in vaccination campaigns are encouraging. on the other hand, the ongoing pandemic, including the spread of virus mutations, and its implications for economic and financial conditions continue to be sources of downside risk. euro area annual inflation increased sharply to 0. 9 per cent in january and february 2021, up from – 0. 3 per cent in december. the upswing in headline inflation reflects a number of idiosyncratic factors, such as the end of the temporary vat rate reduction in germany, delayed sales periods in some euro area countries and the impact of the stronger than usual changes in hicp weights for 2021, as well as higher energy price inflation. on the basis of current oil futures prices, headline inflation is likely to increase in the coming months, but some volatility is expected throughout the year reflecting the changing dynamics of the factors currently pushing inflation up. these factors can be expected to fade out of annual inflation rates early next year. underlying price pressures are expected to increase somewhat this year due to current supply constraints and the recovery in domestic demand, although pressures are expected to remain subdued overall, also reflecting low wage pressures and the past appreciation of the euro. once the impact of the pandemic fades, the unwinding of the high level of slack, supported by accommodative fiscal and monetary policies, will contribute to a gradual increase in inflation over the medium term. survey - based measures and market - based indicators of longer - term inflation expectations remain at subdued levels, although market - based indicators have continued their gradual increase. this assessment is broadly reflected in the baseline scenario of the march 2021 ecb staff macroeconomic projections for the euro area, which foresees annual inflation at 1. 5 per cent

any threat to the ecb ’ s credibility? trichet : after the first 12 years of the euro, despite all difficulties - oil and commodities shocks and financial crisis – we will have delivered price stability fully in line with our definition, less than 2 % close to 2 %. that is the proof. the executive board and the governing council are inflexibly attached to price stability. and our credibility does not rely on words but on deeds and on our own track record. hb : and is this also valid for the decision taken during the weekend? trichet : as regards our sunday decisions they were of the same nature as those taken earlier in the crisis when we adopted non - standard measures. where necessary we take our decisions swiftly, like in 2007 and 2008, but without ever losing our sense of direction : medium - and long - term price stability. hb : the governing council ’ s most recent decision was not unanimous. was there an argument? trichet : i can confirm that three of the four decisions were unanimous or taken on the basis of a consensus. one decision namely the securities market programme was decided, as i have already said, by an overwhelming majority. all our decisions – including last sunday ’ s – are taken after weighing up all the pros and cons. hb : were you not in contact with authorities? trichet : yes, i was in contact with my good friend ben bernanke, the chairman of the federal reserve and other central bank governors, throughout the evening and the night. it was not only a european but also a global serious situation. hb : for more than ten years, the ecb was able to keep inflation in the euro area under control. now, all of a sudden, the union has stopped functioning properly. what has happened? trichet : we are currently facing challenges on a global scale. the events that we are now seeing have ceased to be a matter solely for europe. the challenge of running sound sustainable fiscal policies is the problem affecting most of the world ’ s major industrialised countries. that needs to be understood. the crisis in private financial markets has now been followed by severe tensions in the public sector. ultimately, all industrialised countries are very much in the same boat. hb : from athens are coming only nice words, just words … trichet : no, nice words aren ’ t the only thing coming out of athens. tough measures are already being adopted – measures that were certainly long overdue