PRESS CONFERENCE

Christine Lagarde, President of the ECB,
Luis de Guindos, Vice-President of the ECB

Frankfurt am Main, 18 July 2024

Good afternoon, the Vice-President and I welcome you to our press conference.

The Governing Council today decided to keep the three key ECB interest rates unchanged. The incoming information broadly supports our previous assessment of the medium-term inflation outlook. While some measures of underlying inflation ticked up in May owing to one-off factors, most measures were either stable or edged down in June. In line with expectations, the inflationary impact of high wage growth has been buffered by profits. Monetary policy is keeping financing conditions restrictive. At the same time, domestic price pressures are still high, services inflation is elevated and headline inflation is likely to remain above our target well into next year.

We are determined to ensure that inflation returns to our two per cent medium-term target in a timely manner. We will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim. We will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction. In particular, our interest rate decisions will be based on our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. We are not pre-committing to a particular rate path.

The decisions taken today are set out in a press release available on our website.

I will now outline in more detail how we see the economy and inflation developing and will then explain our assessment of financial and monetary conditions.

Economic activity

The incoming information indicates that the euro area economy grew in the second quarter, but likely at a slower pace than in the first quarter. Services continue to lead the recovery, while industrial production and goods exports have been weak. Investment indicators point to muted growth in 2024, amid heightened uncertainty. Looking ahead, we expect the recovery to be supported by consumption, driven by the strengthening of real incomes resulting from lower inflation and higher nominal wages. Moreover, exports should pick up alongside a rise in global demand. Finally, monetary policy should exert less of a drag on demand over time.

The labour market remains resilient. The unemployment rate was unchanged, at 6.4 per cent in May, remaining at its lowest level since the start of the euro. Employment, which grew by 0.3 per cent in the first quarter, was supported by a further increase in the labour force, which expanded at the same rate. More jobs are likely to have been created in the second quarter, mainly in the services sector. Firms are gradually reducing their job postings, but from high levels.

National fiscal and structural policies should aim at making the economy more productive and competitive, which would help to raise potential growth and reduce price pressures in the medium term. An effective, speedy and full implementation of the Next Generation EU programme, progress towards capital markets union and the completion of banking union, and a strengthening of the Single Market are key factors that would help foster innovation and increase investment in the green and digital transitions. We welcome the European Commission’s recent guidance calling for EU Member States to strengthen fiscal sustainability and the Eurogroup’s statement on the fiscal stance for the euro area in 2025. Implementing the EU’s revised economic governance framework fully and without delay will help governments bring down budget deficits and debt ratios on a sustained basis.

Inflation

Annual inflation eased to 2.5 per cent in June, from 2.6 per cent in May. Food prices went up by 2.4 per cent in June – which is 0.2 percentage points less than in May – while energy prices remained essentially flat. Both goods price inflation and services price inflation were unchanged in June, at 0.7% and 4.1% respectively. While some measures of underlying inflation ticked up in May owing to one-off factors, most measures were either stable or edged down in June.

Domestic inflation remains high. Wages are still rising at an elevated rate, making up for the past period of high inflation. Higher nominal wages, alongside weak productivity, have added to unit labour cost growth, although it decelerated somewhat in the first quarter of this year. Owing to the staggered nature of wage adjustments and the large contribution of one-off payments, growth in labour costs will likely remain elevated over the near term. At the same time, recent data on compensation per employee have been in line with expectations and the latest survey indicators signal that wage growth will moderate over the course of next year. Moreover, profits contracted in the first quarter, helping to offset the inflationary effects of higher unit labour costs, and survey evidence suggests that profits should continue to be dampened in the near term.

Inflation is expected to fluctuate around current levels for the rest of the year, partly owing to energy-related base effects. It is then expected to decline towards our target over the second half of next year, owing to weaker growth in labour costs, the effects of our restrictive monetary policy and the fading impact of the past inflation surge. Measures of longer-term inflation expectations have remained broadly stable, with most standing at around 2 per cent.

Risk assessment

The risks to economic growth are tilted to the downside. A weaker world economy or an escalation in trade tensions between major economies would weigh on euro area growth. Russia’s unjustified war against Ukraine and the tragic conflict in the Middle East are major sources of geopolitical risk. This may result in firms and households becoming less confident about the future and global trade being disrupted. Growth could also be lower if the effects of monetary policy turn out stronger than expected. Growth could be higher if inflation comes down more quickly than expected and rising confidence and real incomes mean that spending increases by more than anticipated, or if the world economy grows more strongly than expected.

Inflation could turn out higher than anticipated if wages or profits increase by more than expected. Upside risks to inflation also stem from the heightened geopolitical tensions, which could push energy prices and freight costs higher in the near term and disrupt global trade. Moreover, extreme weather events, and the unfolding climate crisis more broadly, could drive up food prices. By contrast, inflation may surprise on the downside if monetary policy dampens demand more than expected, or if the economic environment in the rest of the world worsens unexpectedly.

Financial and monetary conditions

The policy rate cut in June has been transmitted smoothly to money market interest rates, while broader financial conditions have been somewhat volatile. Financing costs remain restrictive as our previous policy rate increases continue to work their way through the transmission chain. The average interest rate on new loans to firms edged down to 5.1 per cent in May, while mortgage rates remained unchanged at 3.8 per cent.

Credit standards for loans remain tight. According to our latest bank lending survey, standards for lending to firms tightened slightly in the second quarter, while standards for mortgages eased moderately. Firms’ demand for loans fell slightly, while households’ demand for mortgages rose for the first time since early 2022.

Overall, credit dynamics remain weak. Bank lending to firms and households grew at an annual rate of 0.3 per cent in May, only marginally up from the previous month. The annual growth in broad money – as measured by M3 – rose to 1.6 per cent in May, from 1.3 per cent in April.

Conclusion

The Governing Council today decided to keep the three key ECB interest rates unchanged. We are determined to ensure that inflation returns to our two per cent medium-term target in a timely manner. We will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim. We will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction. In particular, our interest rate decisions will be based on our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. We are not pre-committing to a particular rate path.

In any case, we stand ready to adjust all of our instruments within our mandate to ensure that inflation returns to our medium-term target and to preserve the smooth functioning of monetary policy transmission.

We are now ready to take your questions.

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You said that domestic price pressures are still high. Could you elaborate a bit what the biggest lingering concerns were during your meeting around the issue of wages, profits and productivity, and what you would need to see in the data on those points that you're going to get over the summer in order to be comfortable with another rate cut in September? A second question is on fiscal policy. Are you worried that large deficits and slow consolidation in some countries in the eurozone could make it harder to bring inflation back to 2% and possibly even create financial stability problems?

Thank you very much for your two questions. Let me start with the second one and I'm going to repeat for you a paragraph that we discussed and that we slightly modified, but which essentially remains intact with a bit more force probably, which is that “national fiscal and structural policies should aim at making the economy more productive and competitive, which would help to raise potential growth and reduce price pressure. An effective, speedy and full implementation of the Next Generation EU programme, progress towards the Capital Markets Union and the completion of the Banking Union, as well as the strengthening of the Single Markets, are key factors that would help foster innovation and increase investment in the green and digital transitions.” That could probably echo some of the things that you heard probably this morning, when President von der Leyen presented her proposals. What is really important about the fiscal aspect is the following sentence. “We welcome the European Commission's recent guidance calling for EU member states to strengthen fiscal sustainability and the Eurogroup’s statement on the fiscal stance for the euro area in 2025. Implementing the EU’s revised economic governance framework fully and without delay will help governments bring down budget deficits and debt ratios on a sustained basis.” This was discussed and we believe that it's a very strong endorsement of the principle of discipline, so that all Member States who have adhered and agreed to a set of rules under the fiscal governance framework will actually apply those rules and principles. There's a process that is underway that will take them to submit the multi-annual proposals that will be then reviewed. But this is certainly the set of rules that have to be implemented and respected. On your first question, and you give me an opening because you said what was actively discussed in the Governing Council over the course of the last two days and specifically this morning. I see very much the discussions we had this morning as a story of on the one hand, on the other hand. And you're only asking me a question on the other hand, which has to do with the services inflation, which is obviously well exemplified by the domestic prices that you referred to. And the domestic prices are clearly high, have slightly increased compared even with the May reading. But we believe they are largely determined by what I call the WPP, which for me is the wage, the profit and the productivity. And we spent a lot of time actually looking under the hood of wages, profit and productivity on the basis of rather limited information because we don't have a lot of specificity at this juncture, and we will have a lot more of that in the coming weeks and months. But suffice to say that the wages, whether you are measuring them with reference to compensation per employee, compensation per employee on an hourly basis, the wage trackers that we use and various other instruments, including Indeed for instance, point us in the direction of rather elevated wages, which were embedded and totally taken into account in our June projections. So this does not come as a surprise to us. There is a very large component of catching up with inflation. So nominal wages increase significantly this year in order to compensate the loss of purchasing power that has been experienced by workers over the last couple of years. What is very interesting, because we debated that, including with representatives of the national central banks, is that while it [wage increases] will remain elevated this year, many surveys and the corporate telephone survey, in particular, the SAFE survey that is published, indicate that this trend of elevated wages will decline significantly in the course of 2025 and even more so 2026. So directionally, that’s the direction that it is heading for. On productivity, there is a limited element of recovery at very low levels. Productivity [growth] was at -1% [Q4 2023]. It’s now -0.6% [Q1 2024]. So there is a little bit of progress, but certainly not what we would like to see. Our expectation is that with consumption picking up with more demand, the recovery will strengthen and that will raise productivity as hoarded employees will be asked to respond to the demand that is addressed to the goods production and service supplying sectors. So on that front, a slight improvement in the month of June and we hope to see more of that as demand picks up. On the third component – profits, it has reversed compared to what we observed in the last quarter of 2023, meaning that unit profits are now down to negative territory when they were actually in positive territory in the last quarter of 2023. So there has been absorption of the additional labour costs that resulted from the catch up and from the drift in labour costs. So that’s our analysis of domestic prices. But clearly they are high and are a component of prices that we try to observe very carefully. And that leads me to one word that you used. You used the word “point.” And for those of you who care to listen or to read the speech that I gave in Sintra, I specifically referred to data dependency, which is something that was unanimously endorsed by the Governing Council today. But I also made very clear that data dependency did not mean data point dependency. So we applied that to wages, to other elements that we measured very carefully in the last weeks and that we looked at together in the last two days.

I have a question on the September rate/potential rate move. Provided everything stays like it is right now, so the indicators coming in in line with what you’re expecting, are we going to see a rate cut in September? The second question would be on what we are currently hearing from the United States, a possibility of higher tariffs and more trade tension. Is that something you are discussing in the Governing Council and also in terms of reinflationary effects?

Thank you so much for your two questions. The decision that was taken this morning was a unanimous decision, but what was equally unanimously determined was the fact that we were determined to be data dependent to decide meeting by meeting and not to have any predetermined rate path. So the question of September and what we do in September is wide open and will be determined on the basis of all the data that we will be receiving. Obviously, our projection from June will be a point of reference, but the projection of September plus all the other elements that we will be receiving will be taken into account to decide what we do in September. But there is no predetermined path and that was very strongly endorsed by the Governing Council. The issue of tariffs that you mentioned, that’s an important aspect. And we will have internal discussions within the Governing Council about the risk resulting from segmentation, fragmentation. And obviously the tariff increases that are flagged, either as to be maintained or to be increased, come into the picture. And that is particularly important given that export is one of the engines of the recovery as we flagged it. It’s consumption first and foremost, driven by the increased purchasing power resulting from nominal salary increases and reduced inflation. But it’s also an increase in trade as a result of which exports out of Europe to the rest of the world would matter. And this is an area where we will be attentive to whatever political decisions are made by whoever in the future.

My first question is: you said that the decision was unanimous. Did you discuss or did anyone even want to discuss the prospect and the merits of a rate cut today? And the second question is whether you feel more or less confident about inflation hitting target in the second half of 2025 than you were six weeks ago?

On your first question, you all know how the Governing Council works. We do a lot of debate and discussion and we present views in the course of Wednesday. And on Thursday morning, a proposal is put forward by our chief economist Philip Lane. Then each and every Governing Council member says whether he supports or doesn’t support the proposal by our chief economist, Philip Lane. And on this occasion, everyone was supportive of the decision proposed by Philip Lane. And as I said, it encompasses the three key rates unchanged and the meeting-by-meeting data dependency and no predetermined rate path going forward. You pointed to the issue of confidence and we were not the only central bank in the world to have referred to the need to be sufficiently confident about the inflation path and the disinflationary process. I think we are at the stage where with additional data – data, not data points – additional data that will take multiple avenues and forms, and that we will dissect in great detail in the weeks and months to come; so with additional data, if that data actually confirms the disinflationary process that is at work at the moment, it will reinforce our confidence and we shall see. But it will encompass a whole range of data and indications. And on each and every review of those components, we will still continue to apply our threefold approach, which will focus on inflation outlook. Therefore, it gives us a way in which we can look forward. We will also look at underlying inflation, into all its decomposition, and we will look at the transmission. We will continue to review those three components in the same way.

Ursula von der Leyen was today elected for a new mandate of five years. So there is clarity in Brussels, but still a big fog in Paris, politically, where we are far from seeing an exercise of synchronised swimming, if I can use a metaphor that you may appreciate. So in light of this, can you maybe share with us a comment on this new election of Ursula von der Leyen for the next years? And the second question is, do you think monetary policy in this whole process, not just the meeting in the last two days, but what came prior to this, can be hampered by the fact that allegedly about 40% of the staff here in this house declared to suffer from burnout according to a recent survey that you may have news about?

In my old synchronised swimming days, the coach used to say you have the choice: you swim or you sink. The difference will be in the hard work that you put in. There are a few things from synchronised swimming that I still have loud and clear in my head. I’m not going to comment on the policy avenues that have been flagged by President von der Leyen because the speech was at 11:00 this morning. We were in the middle of our own discussions. I think that all I can do at this point in time is offer my congratulations for the re-election by such a margin. But, of course, we will look very attentively at what the proposals are at the European level. For the moment, we are also very fixated on the April fiscal governance framework that has been decided and which is obviously vetted by the Eurogroup, and of which we will see implementation in the early weeks of September. You asked me about our staff and I would just like to say that, number one, a very significant majority, if not 80 to 90% of our staff, is highly motivated by the mission of working at the European Central Bank and for the benefit of European compatriots. I would also say that a lot of people are working very hard in this institution and I think that all Europeans should appreciate that this work that translates into a few recommendations, into a few numbers and into a few policy matters are substantiated by a massive amount of work that is itself supported by what we call the shared services. And I'm extremely grateful to them for the work that they do and I'm extremely privileged to lead this institution. I'm not saying that because those would be my speaking points. I'm not reading from any speaking points. I really mean it. Second, because we have to be mindful of the very large amount of work that is discharged by many of them, we of course have programmes in place. We have a lot of means and tools that are available for members of staff who feel under pressure, who feel that they're not getting the right opportunities. And we have beefed up those mechanisms. Just to give you an example, since I started as President of the ECB, we've put in place a whistle-blowing procedure. We've installed a mediator who started his work earlier this year. We have numbers of workshops for the leadership in the institution to understand the ramification of leadership and how it is important to not only motivate but also encourage members of staff who work in the various divisions of the ECB. And we will continue doing that. We will continue the dialogue with all staff and certainly with staff representatives. And we conduct our own surveys as well to corroborate or understand better what is at stake. But I take huge strength from the motivation of our staff and the determination that they all have to do a good job for the Europeans.

Firstly, how much do you think the ECB will need to slow the economy and slow demand if wage growth does not moderate as you've forecast that it will? And secondly, given that Donald Trump is now leading in the polls ahead of November's presidential election in the US, what do you think that, if he wins, that could mean for both inflation but also growth in Europe?

Thank you very much, Martin. On the second question, I'm not going to speculate on political development, particularly as election processes are underway and sometimes under dramatic circumstances. Of course, we have to take into account the consequences of, for instance, the increase in tariffs or policies that are determined outside of the euro area by any country with which we have either strong trade or financial links. And obviously, given the size of the US financial markets in particular, the developments taking place in the United States will be very carefully assessed to see what consequences it might have on the European Union and on the euro area in particular. On the magnitude of – I guess you're referring to interest rates – movement that would be needed if the wages [wage growth] were not to decline as expected. First of all, I would deal with your “if”. It's obviously a domain where we dig and we research and we try to find as much evidence, surveys, assessments as possible. And we do that with all national central banks, but we do that also on the basis of our corporate telephone survey, on the basis of all the numbers that are reported by Eurostat, on the basis of the wage trackers and – honestly -- on the basis of everything that we see, the direction in ‘25 and in ‘26 is downwards. And it's not basic, because none of that is basic, and a lot of developments have not had a lot of historical previous examples. But there was a period of two years of very high inflation because of the way in which employment relationships are organised in Europe. There was an element of catch up. And because of the staggered determination of collective bargaining agreements, annual, biannual, triannual negotiations, the deferred impact of inflation is taking place now. The highest numbers that you have are in ‘24, whether you look at wholesale, retail, public sector, private sector: it's in ‘24 that the impact is the heaviest. And the catch up, once completed, will return the employment relationship and the collective bargaining agreement process to a more normal path. If I'm to believe what our national central banks see in their respective numbers in the 20 member states, they see a return to numbers that are perfectly compatible with our target of 2% in the course of ‘25 and even more so in the first part of ‘26. So I'm not going to entertain the hypothesis where all that would be wrong because there's too much corroboration of our assumptions and too much by way of both model-driven but also empirically determined understanding of what is going to happen. Now we might be wrong. And if we are wrong, we will do what we normally do. We reassess on the basis of the data and we take the decision and we continue to be restrictive – more restrictive if it was necessary – so that we can return to our target in a timely manner. And that is the invariable in any of our reasoning: return to target 2% in a timely manner.

The first question is on the decisions. I go back to a sentence that is written: Domestic price pressures are still high, services inflation is elevated and headline inflation is likely to remain above the target well into next year. So this is not totally new, but it gives us a very good idea why you didn’t cut rates today. Looking forward without pre-committing, is there anything in here that we should look at to give us some hints that a cut will come? What has to change, in a way, to reassure people, citizens that anyway we are on this trajectory of rate cuts? And if I may, my second question is, if I can go back, you’ve already commented the Euro area bank lending survey, but if you can say a little bit more because you said credit is weak and is it too weak? Is normalisation in financing conditions too weak as you are in restrictive territory? And I have the feeling you will keep on staying on restrictive territory for quite a while.

Well, that's what we say very clearly in the monetary policy statement: that we will stay in restrictive territory as long as it's necessary to reach our 2% target. And that is clearly the case. And we are not at target and there's time to be had before we get to target. Your first question, what should you look at, which means also what should we look at, to confirm or reinforce our confidence that we are on that disinflationary path and that it remains broadly on track and pointing in the right direction. We must look at all components of data, all measurements, all indicators that will be coming in, in the next weeks and months. So this is going to be a process. I'm not suggesting that we're going to stop in September and, and not look and continue to look further. But it's clear that between now and September, we will be receiving a lot of information, whether it's GDP, whether it's inflation reading, whether it is wage and profit decomposition. There will be much more. You know I'm overly simplistic in that enumeration, but that's what we will be looking at, to see whether or not it confirms the path that we are seeing. So I'm afraid that it's going to be a bit of a busy summer. You asked me a second question, you asked me about the bank lending survey. Allow me to distinguish in terms of credit, because there's a slight difference between corporates on the one hand, households on the other one. On the corporate front, rates have gone down. I think it's at 5.1%, which is 8 basis points lower than where it was. But on the other hand, the credit demand has been extremely low on the part of corporates. And when you decompose their demand, it's largely for the short term and there is redemption for longer term credits by the corporates. On the other hand, when you look at mortgages, the rate is the same, at 3.8%, and that's the first time in many months, but there is an increase in the mortgage demand as indicated by the bank lending survey. So it's a bit of a story of two sides and obviously we would like to see a bit more on the corporate side because that would mean more investment, which is obviously a prelude to continued recovery going forwards.

For President Lagarde: in the last press conference, you said that there was a strong likelihood we were in a dialling back process. Would you say this likelihood is stronger now? And for the Vice President: what is your view on the current absence of a new governor in the Bank of Spain? Do you see us getting to September with no appointment yet?

Well, in your first question of the strong likelihood of dialling back, we clearly dialled back in June and that's when we decided the 25 basis points rate cut. As you have noted on the occasion of this monetary policy Governing Council, we decided to hold the three rates because of the reason that I've mentioned. While we are on that disinflationary track, at the same time, the domestic price pressures remain high and the interconnection between wage, profit and productivity can really constitute uncertainty around that path. So it's a story of “on the one hand, on the other hand”, which leads us to not make any decision on the occasion of this meeting and for future meetings it will be a matter of observing the data, analysing the data and determining whether or not we are reinforced in our confidence that we are on the path. Mr Vice President, you have the rest of the question.

Well, today the Bank of Espana was represented by the deputy Governor of the Banco de Espana, Margarita Delgado. And I would even say well represented by Margarita Delgado; she made her points and it was part of the unanimous decision that the President referred to. With respect to the future, well the election of the Governor of Banco de Espana is the prerogative of the Spanish government. And they have indicated very clearly that before the next meeting they will appoint someone there. Hopefully, I hope that we will have a new governor of Banco de Espana before our next meeting. But it's the prerogative of the government. The only thing that we recommend to all the governors is that they have to be knowledgeable, in terms of economics, finance, banking, and I hope that will be the case again.

My first question is on growth, if it's becoming more of a concern for the Governing Council and it seems that it could enter into your process. And the second: we are in summer and indeed, it's a season of lots of reading. I wanted to ask you if your summer reading list would include the 2021 strategy review to refresh the thoughts of what to do in the next round and what are the areas that are likely to be revisited for the next one?

Thank you so much to take care of my summer reading. I think I might do a lot of reading stories during the summer for my grandchildren rather than diving into very substantive reading as you suggested, but I'll come to that question later. So growth is obviously something that we look at carefully and we certainly observe that we have recovery. It's a recovery that is led by services supported by what we call the “virtuous circle”, between high employment in services and consumption of services. I remind you that service production was up 0.7% above Q1 level, that was the number in April. The service PMI remains expansionary, a tad lower than where it was, but still very expansionary. And the total employment in services has also significantly contributed to the increase of employment in Q1. So services is definitely leading the way. It's clear that on the manufacturing side it's not the case and manufacturing has actually declined in the last few months. And the other aspect which we are also looking at very carefully, because it helps to have a forward-looking vision, is the level of investment, and investment remains weak, driven also by the tight financing conditions and by the uncertainty experienced by the corporates. But we have recovery and we will continue to observe carefully where it is coming from. Suffice to say at this point that it is service driven, not manufacturing driven and that investment could certainly be stronger going forwards. The other element which I pointed to earlier on is this issue of exports. And I think that this is also a domain that we will look very carefully at to see how the numbers are faring going forwards, and in particular, what is the competitive position of the European Union and the euro area relative to other other economic nations, in particular China. So to come back to your question, which is really “what are you going to do with the strategy review?”. So: it is not a strategy review. Let's be clear on that. It's an assessment of our strategy review. The strategy review that we conducted back in 2020-2021 was a massive exercise, that we conducted after, 18 years, of no strategy and no strategy review. So it required that, as I said at the time, we turned every stone and we looked at everything that we use, that we decide, how we decided, how we communicate it, and we will assess what has been achieved, where we have been short, where we can improve, and that will not be the lengthy process that we had, but a shorter process. It will start reasonably soon and you should expect the outcome in the second-half of ‘25. We have deliberately excluded any discussion concerning the symmetric 2% medium term, so the inflation target will not be debated. It can be debated in the future by a future President of the ECB, but not on my watch. The other item that we will also exclude is the discussion of the dot plots, given the experience that some of my colleagues have had of this element.

The inflation is running at very different paces in different EU countries. For instance, in Finland and in Italy, the annual rate is under 1%. And actually we would need a rate cut. So isn't it the problem or how big a problem is it for the ECB’s Council that for some countries, the rates are too high and that actually we would need a rate cut for growth?

That is the beauty of the euro area. It's the beauty of Europe, but particularly the euro area because we are a monetary union and we are 20 different fiscal jurisdictions, as a result of which we have discrepancy or disparity if you will between some countries and others. It was the case exactly in the other direction at the time when inflation ran very high, where you had Nordic countries or Baltic countries where inflation was hitting in the 20% plus, when the average was much lower and the peak on a euro-consolidated basis was 10.6%. So this is the reality that we have and we have to deal with it. I have to tell you that each and every governor when he or she walks in the Governing Council room is a member of the Governing Council and not the representative of his or her country. I'm not suggesting that it's not in the back of their mind because of course they come from there, they return there and they are very much aware of the reality of their economy. But they also know that we are making decisions for the Euro area at large and we cannot make specific decisions that would be nationally and member-state based.