Local view for "http://purl.org/linkedpolitics/eu/plenary/2008-07-09-Speech-3-008"
| Predicate | Value (sorted: default) |
|---|---|
| rdf:type | |
| dcterms:Date | |
| dcterms:Is Part Of | |
| dcterms:Language | |
| lpv:document identification number |
"en.20080709.2.3-008"2
|
| lpv:hasSubsequent | |
| lpv:speaker | |
| lpv:translated text |
"Mr President, rapporteur, ladies and gentlemen, it is an honour for me to present the 2007 annual report of the European Central Bank to you, as provided for in the Treaty. Our relations go far beyond the obligations imposed by the Treaty and the European Central Bank appreciates its very close relationship with Parliament.
As in 2007, the monetary analysis in the first half of 2008 has continued to confirm the prevailing upside risks to price stability at medium to longer horizons. In line with our monetary policy strategy, we take the view that the sustained underlying strength of monetary and credit expansion in the euro area over the past few years has created upside risks to price stability.
To contain prevailing upside risks to price stability over the medium term, the Governing Council further adjusted the monetary policy stance in March and June 2007. After a period of unusually high uncertainty in the context of the financial-market correction, in July 2008 the Governing Council has brought the minimum bid rate in the euro system’s main refinancing operations to 4.25%. This action underlines the Governing Council’s strong determination to prevent second-round effects and maintain longer-term inflation expectations firmly anchored in line with price stability. This is the contribution of the ECB’s monetary policy to preserving purchasing power over the medium term and supporting sustainable growth and employment in the euro area.
Following last week’s decision to raise rates, in the Governing Council’s current assessment the monetary policy stance will contribute to achieving price stability over the medium term. We will continue to monitor very closely all developments over the period ahead.
In the draft resolution you raise a number of issues of relevance for the ECB. I would like to assure you that we will consider the remarks which have just been made and all the remarks that are in the resolution with great care and we will report back to you accordingly.
Let me perhaps very briefly elaborate on some of these points. On the monetary policy strategy, I would like to start by welcoming the positive assessment made by the Committee on Economic and Monetary Affairs on the ECB monetary policy strategy. Our two-pillar framework ensures that all information relevant for the assessment of risks to price stability is taken into account in a consistent and systematic manner when taking monetary policy decisions.
In 2007 the Governing Council launched within the euro system a research agenda to enhance further its monetary analysis, as is also proposed in the draft resolution to continue to improve the ECB’s analytical infrastructure.
On transparency, I would also like to welcome the Committee’s recognition that making the minutes of the ECB Governing Council’s meeting available to the public would not necessarily be advisable. Such a measure would draw attention to individual positions when, in a euro area of 15 and very soon 16 countries, what counts is the position of the collegial decision-maker, the Governing Council, the college. It could also lead to pressures on Governing Council members to abandon their necessarily euro-area perspective when taking monetary policy decisions.
As already emphasised on previous occasions, I see the introductory statement I present on behalf of the Governing Council at the monthly press conference as an equivalent to what other central banks call ‘summary minutes’. Together with the ensuing question-and-answer session, the introductory statement provides in real time a comprehensive overview on the part of the Governing Council of the current monetary policy stance. This communication instrument has served us well in guiding financial-market expectations.
As regards fiscal policies, the ECB shares the view expressed that all Member States must fully respect the Stability and Growth Pact. A renewed increase in the euro-area aggregate fiscal deficit ratio is projected for 2008. There is a clear risk that some countries will not comply with the provisions of the preventive arm of the Stability and Growth Pact. Achieving sound and sustainable budgetary positions and on this basis allowing the free operation of automatic stabilisers is the best contribution we trust fiscal policy can make to macroeconomic stability.
The draft resolution also refers to the risks posed by economic differentials across euro-area countries, which to some extent reflect structural rigidities and/or inappropriate national policies. It goes without saying that economic divergences across euro-area countries cannot be addressed by monetary policy.
This is the fourth time I have spoken to you this year. My colleagues on the executive board have also been in close contact with the European Parliament, particularly on matters such as enlargement of the euro zone, payment systems and the tenth anniversary of Economic and Monetary Union.
In order to avoid a protracted period of either low growth and high unemployment or overheating, as a country response to asymmetric shocks, reforms to enhance the resilience to such shocks should be undertaken at the national level. These include well-designed structural reforms to enhance competition, increase productivity and foster labour-market flexibility.
Let me emphasise again that there is a need for lucid monitoring of national competitiveness developments – including unit labour costs – as recouping ex post loss of competitiveness is a difficult exercise. In this regard we support Parliament’s call for responsible wages and price policies.
Let me now turn to the issues highlighted by the financial-market correction for crisis prevention and crisis management, which also figure prominently in Parliament’s analysis.
As regards crisis prevention, the market correction highlighted issues for both supervisors and central banks. Supervisors should make further efforts to reinforce cooperation and exchange of information on a cross-border basis. It is of crucial importance to further exploit the potential of the Lamfalussy framework. The Ecofin Council has agreed on certain measures to that end, and attention should now shift towards implementing those orientations.
The market correction, in our view, has not provided any convincing evidence for an overhaul of the current supervisory framework, for instance through the setting-up of a new authority for EU supervision. Central banks, including the ECB, have to a great extent been effective in identifying the weaknesses and risks to the financial system that materialised as the turmoil unfolded. I will not elaborate on that.
Looking for the lessons for crisis management, the main issue that emerged during the turmoil concerns the need for a smooth flow of information between central banks and supervisors during the unfolding of a crisis. Central banks may need supervisory information for the effective performance of their functions in the management of the crisis. This applies to the Eurosystem as it applies to all central banks. Supervisors from their side may benefit from central bank information. Therefore, the envisaged reinforcement of the EU legal basis for information exchange between central banks and supervisors is very strongly supported by the ECB.
Let me conclude with some remarks concerning the integration of Europe’s payment systems. We noted with satisfaction the positive assessments in the draft resolution about SEPA and TARGET2. Concerning the Eurosystem’s TARGET2-Securities initiative, the Governing Council will in the coming weeks decide on the continuation of the T2S project. It is important to note that all major CSDs have responded positively to our initiative.
2007 to 2008 and explain the monetary policy measures taken by the ECB. Then I shall make a few comments on points and proposals that you have put forward in your motion for a resolution on the ECB annual report for 2007.
In 2007 the ECB operated in a challenging environment with rising and volatile commodity prices and, since the second half of 2007, heightened uncertainty stemming from the ongoing correction in financial markets across the world that was mentioned by the rapporteur. Despite these developments, the euro-area economy continued to expand at solid rates in 2007, with annual real GDP growing by 2.7%.
In the first half of 2008, moderate ongoing growth in real GDP has continued, although the quarter-on-quarter profile is likely to show significant volatility owing to temporary, in part weather-related, factors. It is thus important to focus on the medium-term trend when assessing growth developments.
Looking ahead, on the external side, growth in emerging countries should remain robust, supporting euro-area foreign demand. On the domestic side, the economic fundamentals of the euro area remain sound and the euro area does not suffer from major imbalances. Unemployment rates and labour force participation have increased significantly in recent years, and unemployment rates have fallen to levels not seen for 25 years.
That being said, the uncertainty surrounding this outlook for growth remains high, with downside risks mainly relating to further unanticipated increases in commodity prices, possible further spillovers from continuing tensions in financial markets to the real economy and increasing protectionist tendencies.
Turning to price developments, in 2007 average annual HICP inflation in the euro area was 2.1%, slightly above the ECB’s definition of price stability. However, at the end of the year, substantial increases in international oil and food prices brought inflation to levels well above 2%. Since then, inflation in the euro area has risen further and, in the wake of renewed sharp commodity price increases, arrived at the worrying level of around 4% in mid-2008. Looking ahead, the annual HICP inflation rate is likely to remain well above the level consistent with price stability for some time, moderating only gradually in 2009.
Risks to price stability over the medium term remain clearly on the upside in 2007 and have intensified over recent months. These risks include possible further rises in commodity prices and unanticipated increases in indirect taxes and administered prices. In addition the Governing Council is strongly concerned that price and wage-setting behaviour could add to inflationary pressure through broadly-based second-round effects. First signs are already emerging in some regions of the euro area. In this context, indexation schemes for nominal wages are of particular concern and should be avoided."@en1
|
Named graphs describing this resource:
The resource appears as object in 2 triples