Ladies and gentlemen, first of all, let me wish you a Happy New Year. The Vice President and I are very pleased to welcome you to our press conference. We will now report on the outcome of today's meeting of the Guardian Council, which was also attended by the Commission Vice President, Mr. Dombrovskis.

Based on our regular economic and monetary analysis, we decided to keep the key ECB interest rates unchanged. We continue to expect them to remain at their present levels for an extended period of time and well past the horizon

of our net asset purchases. Regarding non-standard monetary policy measures, we confirm that our net asset purchases at the new monthly pace of 30 billion euro are intended to run until the end

of September 2018, or beyond if necessary, and in any case until the governing council sees a sustained adjustment in the path of inflation consistent with its inflation aim. If the outlook becomes less favorable,

or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, we stand ready to increase the asset purchase program in terms of size and or duration.

The euro system will reinvest the principal payments from maturing securities purchased under the APP for an extended period of time after the end of its net asset purchases, and in any case, for as long as necessary.

This will contribute both to favorable liquidity conditions and to an appropriate monetary policy stance. Incoming information confirms a robust pace of economic expansion, which accelerated more than expected

in the second half of 2018, 17. The strong cyclical momentum, the ongoing reduction of economic slack, and increasing capacity to utilization strengthen further our confidence that inflation will converge towards our inflation aim

of below, but close to 2%. At the same time, domestic price pressures remain muted overall, and have yet to show convincing signs of a sustained upward trend.

Against this background, the recent volatility in the exchange rate represents a source of uncertainty, which requires monitoring with regard to its possible implications for the medium-term outlook for price stability.

Overall, an ample degree of monetary stimulus remains necessary for underlying inflation pressures to continue to build up and support headline inflation developments over the medium-term. This continued monetary support is provided

by net asset purchases, by the sizable stock of acquired assets, and the forthcoming reinvestments, and by our forward guidance on interest rates. Let me now explain our assessment in greater detail,

starting with the economic analysis. Real GDP increased by 0.7% quarter on quarter in the third quarter of 2017, following similar growth in the second quarter.

The latest economic data and survey results indicate continued strong and broad-based growth momentum at the turn of the year. Our monetary policy measures, which have facilitated the deleveraging process, continue to underpin

domestic demand. Private consumption is supported by rising employment, which is also benefiting from past labor market reforms and by growing household wealth. Business investment continues to strengthen

on the back of very favorable financing conditions, rising corporate profitability, and solid demand. Housing investment has improved further over recent quarters. In addition, the broad-based global expansion is providing impetus to euro-area exports.

The risks surrounding the euro-area growth outlook are assessed as broadly balanced. On the one hand, the prevailing strong cyclical momentum could lead to further positive growth surprises in the near term.

On the other hand, downside risks continue to relate, primarily to global factors, including developments in foreign exchange markets. Euro-area annual HICP inflation was 1.4% in December 2017,

down from 1.5% in November. This reflected mainly developments in energy prices. Looking ahead, on the basis of current futures prices for oil, annual rates of headline inflation

are likely to hover around current levels in the coming months. For their part, measures of underlying inflation remain subdued, in part owing to special factors, and have yet to show convincing signs of a sustained upward trend.

Yet, looking forward, they are expected to rise gradually over the medium term, supported by our monetary policy measures, the continuing economic expansion, the corresponding absorption of economic slack, and rising wage growth.

Turning to the monetary analysis, Broad Money M3 continues to expand at a robust pace with an annual rate of growth of 4.9% in November 2017, after 5% in October, reflecting the impact

of the ECB's monetary policy measures, and the low opportunity cost of holding the most liquid deposits. Accordingly, the narrow monetary aggregate, M1, continued to be the main contributor to broad money growth,

expanding at an annual rate of 9.1% in November, after 9.4% in October. The recovery in the growth of loans to the private sector observed since the beginning of 2014 is proceeding. The annual growth rate of loans to non-financial

corporations increased to 3.1% in November 2017, after 2.9 in October, while the annual growth rate of loans to households stood at 2.8% in November, compared with 2.7 in October.

The Euro Area Bank Lending Survey for the fourth quarter of 2017 indicates that loan growth continues to be supported by increasing demand, and a further easing in overall lending conditions. The pass-through of the monetary policy measures

put in place since June 2014 continues to significantly support borrowing conditions for firms and households, access to financing, notably for small and medium-sized enterprises, and credit flows across the Euro area.

To sum up, a cross-check of the outcome of the economic analysis, with the signals coming from the monetary analysis, confirmed the need for an ample degree of monetary accommodation to secure a sustained return of inflation rates

towards levels that are below, but close to 2%. In order to reap the full benefits from our monetary policy measures, other policy areas must contribute decisively to strengthening the longer-term growth potential and reducing vulnerabilities.

The implementation of structural reforms in Euro area countries continues, needs to be substantially stepped up to increase resilience, reduce structural unemployment, and boost Euro area productivity and growth potential. Regarding fiscal policies, the increasingly solid

and broad-based expansion strengthens the case for rebuilding fiscal buffers. This is particularly important in countries where government debt remains high. All countries would benefit from intensifying efforts

towards achieving a more growth-friendly composition of public finances. A full, transparent, and consistent implementation of the Stability and Growth Pact, and of the macroeconomic imbalance procedure over time and across countries, remains essential

to increase the resilience of the Euro area economy. Strengthening economic and monetary union remains a priority. The Governing Council welcomes the ongoing discussions on completing the banking union and the capital markets union, and on further deepening economic and monetary union.

And we are now at your disposal for questions. Mr. Flickert. Mr. President, I have a question concerning the asset purchase program. When you launched the program, you decided to keep the purchases strictly,

according to the ECB capital, key. But now it turns out that you are increasingly deviating from this as a new survey or a new calculation from the Center of European Economic Research has claimed. So why is this so?

And is this affecting the neutrality of the purchases? So it's not so. It doesn't affect the neutrality of the purchases. And I'll tell you the reasons why you observe these deviations. The ECB doesn't favor certain countries over others

in its PSPP purchase program implementation. But as you know, purchases are guided by the ECB's capital key, which takes into account GDP and population. Now focusing excessively on any particular purchase period,

for example, on 2017 only, could result and yield wrong interpretations. The overall stock of Eurosystem PSPP holdings is the relevant metric for any assessment of the program and not the recent purchase flows.

Just to give you an example, currently the Eurosystem holdings of German securities are above the German share of the ECB capital key. This equates to the Eurosystem holding 18 billion euro more in German security

than what is implied by the ECB capital key share. Of course, the largest deviation from the ECB's capital key is Greece due to their ineligibility. So in addition, Eurosystem holdings

of Portuguese securities are 1.8%, which is 27% below compared to a share of ECB capital key, which is 2.48%. These flows can differ as the design of the program is flexible

and the distribution of actual purchases often deviates from the ECB capital key. For example, if we fall short of purchase targets in one jurisdiction for market liquidity reasons, then the shortfall is made up in others and this has happened since the beginning of the program,

so it's nothing new. Moreover, this is particularly relevant for the process of reinvestments where the amounts to be reinvested are sometimes distributed over three months and this can lead to temporary changes in the relative net purchase shares.

In certain countries, implied purchase shares are above the capital key percentages as we don't buy the required bonds in other jurisdictions due to various program constraints. For example, eligibility criteria, issue and issue limits, market liquidity.

So all these adjustments reflect the program's inbuilt flexibility and the commitment to a continued smooth implementation of the program. And our general approach has never been changed. So our purchase shares are guided by the ECB capital key

as opposed to market cap, which is a reference for all other purchase programs. Moreover, comparing and finally individual jurisdictions net issuance and the actual purchases in the respective countries suggests all other things being equal,

the downward impact of the program on yields for countries such as Germany should be higher than on other countries. Thank you. It's Kalimovsky. It's Kalimovsky, Bloomberg. My first question would be about your comments

on the currency volatility. You said that it represents a source of uncertainty and also with regards to the implication for inflation. Now, you also talk about your strength and conviction about the inflation will return to the target. So I would like to ask how much euro

is already a problem in that respect or what will have to happen for the exchange rate to become a problem in respect to inflation target? And my second question would be about your discussion on reviewing the forward guidance. The account of the meeting from December mentions that there's a mention of a need

to revisit the guidance early in the year. So my question is, has this discussion already started? And if so, what's the basic summary of that discussion? Thank you. Thank you. Let me answer the second question first.

Let me get the record straight because several members of the governing council were surprised by the reading of the accounts, by the effects that the reading of the accounts had on the markets and they asked me to clarify this. First of all, there's no difference

between the accounts and what I said in the press conference. What I was asked was, did you discuss cutting the link in your guidance between the APP, the asset purchase program and inflation and what is your view on that question? And I responded, we didn't discuss cutting the link.

Actually, in a sense, I went beyond what was in the account in my press conference because I said as a consequence of this continued expansion, also the component coming from the forward guidance of interest rates will gain further and further importance. So this is a natural process led by the recovery.

In this sense, our monetary policy accompanies the recovery as I had a chance to say in a speech some time ago. But we haven't discussed the link. Now, the excerpt of the account says, looking ahead, the view was widely shared among members to the governing council's communication would need to evolve gradually without a change in sequencing.

So the only discussion that took place was about the need to have a discussion. You see, my press conference started going to the substance, but the actual discussion in the governing council was only scheduling the discussion which was to take place in the early part of this year.

Yeah, well, no, just that's important to clarify. So discussion hasn't really started. We really went through the events since October to now and trying to basically assess

whether something has changed. And there hasn't been much of a change, other than a continuing strengthening of the economy more, to some extent, even more than expected. Now, we have, as I said, downside risks relating primarily to geopolitical and especially foreign exchange markets.

But by and large, the risks to growth are balanced. Now, can we declare victory? The answer is no, not yet. Price pressures are muted. Underline inflation is still, doesn't show signs of any convincing upward movements.

Price pressures along the pricing chain remain broadly stable and subdued. Recent data on wage growth confirm some lift up from its lows of 2016 second quarter, but it's a lift up so far, mostly due to wage drift, not negotiated wages.

So we have to look better and see whether this picks up and is confirmed. And the survey measures of long-term inflation expectations remain broadly unchanged, while market-based measures have increased to 1.76, 78%. So by and large, there isn't much of a change,

which led us to simply restate the policy, as I've just said in the introductory statement, where basically we continue the monthly pace of 30 billion euro that's tended to run until the end of September 2018, and so on.

There is no need for me to read it again, I guess. So also we went through how we judge whether progress in achieving our inflation objective has happened, has taken place.

And you remember we have three criterias. The inflation rate has to be on a path that reaches levels below, but close to 2% in the medium term, so it's not touch and go in the medium term. And that's one important thing

that several speakers have remarked today, is that our commitment to this objective remains firmer than ever. So most members reiterated the steadfast commitment to reach our objective. The second point is that when we look

at inflation paths over the coming weeks, months, years, we have to see, we'll see a range of paths, but this range has to be pretty narrow. In other words, we have to be convinced, we have to have confidence in the degree of convergence. That's the other thing that we will certainly look at that.

And then the third criteria is that this convergence should be self-supported. In other words, we'll have to do without our monetary policy support. So, and finally, so we aren't there yet. And finally, even when we judge that adjustment

has progressed towards, has progressed enough, our monetary policy will remain very accommodative. Why? Because we will continue reinvest, and for a lot, as I said in the introductory statement for an extended period of time,

and especially the interest rates will remain at the present level well past, that's a fundamental importance in our forward guidance, well past the end of our net asset purchases. So basically, very little has changed

We have observed, however, since December, that the expected path of short-term rates, interest rates, has moved upward, and that the exchange rate volatility has increased.

We discussed some of the causes of these developments, and there are basically three sets of causes. The first is the unquestionable improvement in the economy, and naturally, as I think I've said many times, as the economy improves, this will accompany quite nicely

our monetary policy, and monetary policy will accompany the improvement in the economy in a way that the relative influence of the four pillars of our monetary policy will change, and will move more and more towards reinvestments for a long period of time, towards the importance of the stock

of bonds that's been accumulated, and towards, especially as I said, the forward guidance on interest rates, and the well past. So that is one cause is the improvement in the economy. But the second cause of these movements that was found is the, in a sense, the heightened market sensitivity

to perceived changes in our communication. And I think that is unquestionably the other reason. Finally, however, there is a third reason, which is, and this relates essentially to the exchange rate, that the use of language

in discussing exchange rate developments that doesn't reflect the terms of reference that have been agreed. Lastly, on October 14, 2017, in the IMFC in Washington.

So all this has, is changing. Now, is this your question? I'm sorry, my answer's become longer and longer. I just apologize for that. I'll stop here. Again, in any event, someone else will ask this question I was meant to answer.

You will see. Ms. Weissbach, please. I have a direct follow-up question, Annette Weissbach with CNBC. Let us talk about the dollar weakness. I mean, that's what you probably were referring to in your last comment, right, when you answered the question. It's not very helpful to hear from certain members

of the US administration that a lower dollar is something they kind of like. What's your view on that? Are we heading towards a scenario that we could call a currency war scenario, or certainly, yeah, perhaps we leave it like that.

And then I have another question on, you earlier said that you don't think, and there will be an abrupt end to QE, or the asset purchase program by September. Are you sticking to that message, or could you also envision to end it, and then only have the reinvestments

going forward after September? Well, that's mainly it. Thank you. Thank you. Now, on your first question, first of all, let me always reiterate what I always say when we talk about exchange rates. We don't target exchange rates, and we say exchange rates are important

for growth and for price stability. Now, in certain movements in the exchange rates, to the extent that they are justified by the strengthening of the economy, are part of nature, it's a fact of nature. So the issue is whether these other movements

in the exchange rate, which may be caused by the use of language that I said is not part of the terms of reference that have been agreed recently, whether that has an effect on our inflation path. We look at inflation.

That is our main concern. So now it's too early to assess whether the pass-through has already taken place, and what's gonna be the extent of this pass-through. It's pretty clear, however,

that some people are questioning the extent by which pass-through actually happens nowadays. But it's pretty clear that very large movements in the exchange rate are bound to have a pass-through. In any event, the language that we agreed in Washington was said this, we recognize that this is the communique

of the 36th meeting of the International Monetary Financial Committee in the IMF. So all the ministers and the governors there, we recognize that the excessive volatility or disorderly movements in the exchange rates can have adverse implications

for economic and financial stability. We will refrain from competitive devaluations and will not target our exchange rates for competitive purposes. I think that's my answer. The answer to the second question,

yes, I said that. I said that we, as far as I was concerned, I said we didn't have a proper discussion, and we didn't have a discussion today at all. But I said as far as I was concerned, we never stopped the program abruptly. Now here, we have to distinguish between sudden stop,

an extension of the program, and gradual tapering. And that's exactly the discussion that we will have. It's one part actually of the discussion that we will have, and the discussion to which the accounts that you read were referring to.

Mr. Karani. Mr. Draghi, up until now in January, private sector purchases made up about a third of your asset purchases. Are these proportions indicative of volumes going forward? Second question relates to the Ombudsman's recommendation

about the G30. Are you going to accept that and give up your membership? Why or why not? Thank you. First, the answer to the second question. We've received the letter of the Ombudsman, the work of which, by the way, we appreciate greatly,

and we will respond in due time. So there is a procedure in place. We'll assess the letter, we'll assess the comments, and then we'll respond. On the first question, it's not, I mean, these are volumes, and they follow also principles of market neutrality.

And so it's difficult for me to answer your question now. One should not look at monthly purchases, because they may reflect temporary market conditions. So we have a certain size that will develop across the program.

Ms. Jones? Claire Jones, Financial Times. Just to revisit your answer to Annette's question, I think the comment on the purchases not stopping suddenly

was widely viewed at the time as an indication that past September there would be a gradual tapering, you know, seemed to be saying that there needs to be a debate on that, and there may be either a debate on doing that or an extension, which I think we already know there's been an extension, so it may be possible to just clarify that, then I think that would be helpful.

How important, and for my second question, how important do you think the debate that some of the unions in Germany, such as E.G. Mital, are having now on pay negotiations? Could we see a situation where,

if E.G. Mital does win a favorable deal on pay, that triggers broad increases in pay across the Eurozone economy, or are those sorts of pay increases that we're talking about in certain sectors in Germany confined to places that are doing very well in Europe? On your first question, you know, some people,

when I said that, some people actually understood differently, they understood that it would be an extension. So, and others, as you probably did, there would be a gradual tapering. But others, later on, there was a comment, as far as I'm concerned, this program could actually stop immediately, and markets reacted as if that were a serious contingency.

So all three, I just want you to distinguish between the three choices, the three options, and then you can go back to exactly what I said when you asked, and give some probability to which one of the three is probably

the shorter to happen. Now, the other question is, wage negotiations belong entirely to social partners. We observe what's happening from the angle

of the, from a monetary policy angle, where we consider a wage growth, nominal wage growth, as a very convincing sign of future inflation convergence to our objective.

And clearly, we don't want to encourage any censor, just we look at that with the touched eyes of the policy makers. And so, nominal wage growth can, for the time being,

you asked me whether it's limited to Germany or will spread to other countries. This will depend very much on the conditions of the labor market. Clearly, in Germany, labor market is experiencing, is experiencing pretty tight conditions. In other countries, the labor market's lack

is still pretty wide. Also, it depends on what sort of bargaining strategies the social partners have. For example, in some countries, even though the labor market is tight, the unions are not negotiating for higher wages

immediately, but rather for job security. And there is plenty of evidence that even though employment's gone up a lot, a lot, much of it is of a temporary, part-time quality.

So, we have to assess what are the different negotiating strategies before we can conclude that one single nominal wage negotiation in one country will actually spread its effects to the rest of the euro area. Ms. Boufaki?

Isabela Boufaki from Soleventi Quattrore. Mr. President, two questions. One is on negative rates. There are just less than $10 trillion of assets in negative yields, and markets are in uncharted waters

and have been for a long time. Do you see any financial stability risks stemming from such monetary policy being very accommodative for a long time? And then if you could expand more on something that you said on fiscal policies,

on rebuilding fiscal buffers for where government debt remains high and respect discussion in Italy, as everyone knows on debt. Thank you. Thank you. I will answer the second question, but first let me give the floor to the Vice President

on the financial stability risks caused by the negative rates for a long time on lots of assets. Yeah, thank you. Yes, as the President said, negative rates have been in place for quite some time, and we see a situation where no one can talk about,

say, asset price bubbles in the euro area. We have overstretched valuations in some places in what regards commercial real estate or high yield bonds, but nothing else in what regards the normal corporate bond market

using different models to calculate the fair value. We see that the prices in the market are indeed close to the fair value. The same is true about housing prices, in spite of prices of housing being increasing recently.

Nevertheless, the analysis of fundamental values show that this is in line with fundamentals. To quote some numbers, prices are increasing around 4% prices of housing. Between 2003 and 2006, they were increasing by 7%.

Credit to mortgages, credit to house purchases is increasing at 3.3% in the period of 2003, 2006, was increasing at 10%. So there is indeed no general situation

of overvaluations on average in the residential properties. Of course, in some regions of some countries, yes, there are price increases that can be seen as excessive,

but as you know, several countries have taken macroprudential policies of regulatory nature to face those excesses, and that's the proper way to go. And as you know, now we have also, as ECB, responsibility in what regards macroprudential policy. So it's being applied, it's being used,

and there is indeed no general situation of overvaluations. The effect on banks of negative rates, also we have shown several times that taking into account all the effects of our policies, that on average they have been favorable to profitability,

which by the way, has been increasing. Banks have been increasing. Profitability, still low, yes, but increasing, which again shows that the policy of negative rates has been absorbed by the banking sector,

and has not created a problematic overall situation to financial stability. On the first question, the need to rebuild fiscal buffers, the part of this expansion is cyclical,

and at some point it will stop, and interest rates sometime in the future will stop being so low. At that point, all governments will want to have policy space, especially in case the stopping of the cyclical expansion is not gonna be benign.

They will want to have policy space. They have to recreate policy space. That's why budget consolidation now, when the time is good, is actually favorable, and it's a good thing to do. And we are saying that not only with respect to Italy, but actually it's all over,

that one can be, with very few exceptions. What's happening now is that, in fact, one sees that there is no budget retrenchment, or even there is budget expansion at the time of a solid expansion in the economy,

and with very low interest rates. Mr. Caulk? Thank you. Mr. President, Eric Caulk, LifeSquawk News. My first question, well actually they're both about communication. The first one is how do you feel about the ECB's

communication since the beginning of the year, not only from the headquarters, but also from the members of the Governing Council, and do you see any room for improvement, and in what areas? And the second one is communication from the United States. What level of concern within the Governing Council

was there today, and yesterday, well actually today? Or have you spoken to anybody in the Governing Council about those comments? How do they feel about a possible change in US policy? Answer your second question first. Yes, there was concern. Several members expressed concern.

And this concern was also, in a sense, was broader than simply the exchange rate, was about the overall status of international relations right now. The, so the answer to your question is yes,

we are concerned. There's also an additional concern that the Governing Council and the introductory statement itself, in a sense, hints at. If all this were to lead to an unwanted tightening of our monetary policy, which is not warranted, then we will have to just think about

our monetary policy strategy. This was something that is actually being said in the introductory statement, which has also been expressed. On the, you asked me about the various communications. Well, I think you see the same thing in other jurisdictions as well.

It's partly, but let's look at the positive angle of this. All the communications that you've seen since December have in common three characteristics that were reiterated today. First of all, all of them are based

on a steadfast commitment to the objective of the 2%, close but below 2% in the medium term. Second, no communication whatsoever questioned the sequence

whereby interest rates will stay at the present level well past the end of the net asset purchase program. And third, the well past was always reiterated and emphasized. I think all three communications then, of course you have nuances which were picked up by the market, but we are in the range

of normal differences of views. Mr. Ferles. Thank you, Tom Ferles from the Wall Street Journal. Mr. Draghi, some investors are pricing in

an interest rate increase already this year. Do you think that's, I mean, could that be in line with the ECB's promise to only raise rates well past the end of the net asset purchases? And my second question is on the Euro. You've mentioned about the volatility and how that's a concern. At its current level, do you think it's still reflecting

the fundamentals or do you think it's exaggerated? Thank you. It's to 125 right now. Well, I can answer the first question. I'm not sure I can answer the second question. But the first question is that based on data, on today's data and today's projection, I think I see very few chances at all

that interest rates could be raised this year. The second point is whether this squares with fundamentals or not. Rather than asking this question, which is really very difficult, we should ask,

is this movement being produced, in other words, is it endogenously produced by the strengthening of the economy by an uptick in inflation or in wages? Or is it being produced by statements or is it being produced by monetary policy elsewhere?

Is the difference between the monetary policy cycles and the recovery cycles in the various economies, the difference, does this difference grant such movements in the exchange rates or not? These are the questions that we should ask at this point in time.

Thank you. Mr. Garcia. Yes, hello, good afternoon. Javier Garcia from the Spanish news agency FM. The European Ombudsman has asked you to leave your membership

in the group of 30 club. She said literally that your membership in this body could give rise to a public perception that the independence of the ECB could be compromised. What do you think about? Thank you very much. Thank you. I answered this question before. We have received the letter which was published

and we are assessing it and will respond according to the existing procedure. Thank you. By the way, incidentally, the Ombudsman also acknowledges that there is no evidence that these meetings

could have directly influenced or have had an adverse impact on the ECB supervisory task. She also acknowledges that the ECB must have dialogues with market participants and also acknowledges that the ECB has a robust system of safeguards in place to manage its contacts with the financial sector.

But as I said, I don't want to discuss further because we are in the course of assessing this letter and preparing our response. Thank you. Mr. Lacroix. Jean-Philippe Lacroix from Agence France-Presse. Mr. President, since you outlined today

that the sequencing of exit strategy of ECBs like written on marble, all the- It's in stone, one member said today. C'est des crides en le marbre in French. C'est des crides en le marbre. So all the debate should focus on the speed of execution of this program in the coming months.

And as you said before, there are normal differences of views between governing council members. Would you think these differences could deepen and make the debate within the governing council much difficult and for you, you are then confronted with this task to find the right solution

for the exit strategy, which is something totally new for your area, I mean, with this short history. And second question, if I may. So bottom line of today's presser, you give us rendezvous in-

No, no, Mr. Constantio is talking to you at the same time. He's a bit irritated with my frustration. I asked to you, Mr. Draghi, my second question. Bottom line of today's message, you give us rendezvous in March, on the 8th of March, when ECB will get a new, fresh forecast

on prices, developments. And so you maybe then give an answer to what the minutes and the previous December meeting stated that the forward guidance should be revisited early in 2018, so would it be in March?

No, about the first point, I can only express a wish here. I don't think that the differences between the various members of the governing council

are as substantive as they were on other occasions. As a matter of fact, they're much less substantive. Here we're talking about, you remember the three elements, confidence in the convergence of our inflation path to the subjective,

but also since we don't see now in the data much of inflation is patience and persistence in our monetary policy accommodation. The three elements combine themselves in the various members of the governing council's view of the world.

And that's what we are talking about. Some of them are a little more confident, perhaps because they live in jurisdictions where inflationary developments are a little more encouraging or the labor market conditions are tighter, and they bring with themselves the information set they have. But we are not talking about deep existential differences.

Going back also to one question, where however we have to be careful is that when, there may be differences about when to say certain things. For example, we can all agree about certain things, but we may disagree about when to move forward.

And that's where the market wants to be informed clearly. Because markets of course have expectations not only about the path, the policy path, but also about the announcement dates, the timelines. And that's where discipline is needed. But as I was saying, this is in a sense

is a second degree of importance difference with respect to the first. As a matter of fact, the overall situation doesn't justify profound existential differences at this point in time. Now your second point was,

in March we'll have projections and then we'll assess how things stand at that point in time. This is Nina Oz. This is Nina Oz, this side. So I'd like to pose another question on the exchange rate.

You already said that probably your communication has an effect on the exchange rate. And I wonder how large you believe is the effect of your own communication on it. And if you see the danger that you react to something in the end that you created yourself in some kind of vicious circle in the end.

And my second question. Excuse me, could you explain me what you meant? Okay. You already said that you believe that the communication of the ECB may have an effect on the exchange rate. And you also said that, no? No, no, no, no, I'm sorry. I said, no, no, I said that the exchange rate has moved

in part because of endogenous reasons, namely the improvement in the economy, mostly improvement in the economy, in part for exogenous reasons that have to do with communication, but not by the ECB, but by someone else.

And this communication doesn't, not the ECB communication, but the someone else communication doesn't comply with the agreed terms of references. That's what I said. Okay, I understood, but you cannot deny

that a lot of people in the market believe that also the ECB communication moved the exchange rate. Maybe you can comment on that. I can comment on that, certainly. You see, there is a difference between designing monetary policy with the view to pursuing price stability

and your objective and that you have to because of your mandate. And that design of monetary policy may well have consequences on the exchange rate, but there will be indirect consequences. We don't target the exchange rate.

Difference is when I go and, not me, someone else, goes and says that basically a good exchange rate is good for exporters, and it's good for the economy, and it's good, and that means it's targeting the exchange rate. And you know, that agreement, subtle as you want,

has been in place for decades now, whereby policymakers, of course, if you do take monetary policy decisions, they may have consequences on the exchange rate on both sides, on all sides of our monetary policy jurisdictions, in both sides of the ocean,

but also other countries as well. But the explicit targeting of the exchange rate is something that really goes back many, many years ago before these terms of reference were agreed.

Why did you choose September, or not December, or June as a month to finish this program? Second question. Commodities are listed in dollars.

So when monetary policy normalizes in the Eurozone, the euro appreciates. But commodity price grows more in proportion of this, and with them, the general price. But this is a bad inflation. Is inflation of OPEX sign? Is inflation of EZ dollar?

Is that correct, that this way, a restrictive monetary policy in Europe hand up to feed the price further, instead to cool them down? Thank you. Thank you. Well, the answer to the first question is basically when we recalibrated

our net asset purchase program last October, we had to wait very much as we are doing today, confidence versus patience and persistence. And we had a discussion about that, whether it should be six months or nine months, whether it should be 30 or 40 or 20 per month.

And after all analysis and models and discussions, we came out with these figures of 30 per month until September. So it's a matter of educated judgment based on data, on projections of inflation,

on what is the, in a sense, the best design that would produce the convergence in the safest way to our path, and also in the most reliable way to our objective. The answer to the second question, we are trying, that's why,

what you say is absolutely right. I mean, you have that as a possibility, but that's why in defining our objective of inflation, we use several measures. We use headline inflation, which includes these effects, but we also use underlying inflation, which excludes food and energy.

And then we have other definitions of inflation as well. So all these mind, our objective is defined in terms of headline inflation, but to gain sufficient confidence that the convergence towards our objective is in the medium term, is stable and is self-sustained,

we need to have evidence also from the other definitions of inflation. In other words, data that don't change because say the market for a certain commodity, all of a sudden changes supply of demand change.

And the final question goes to Mr. Schraus. Thank you, Max Schraus, Berzenseidung. The first one is, you've talked a lot about the Euro today and its potential effects on inflation. On the other hand, we also have an oil price. It has risen significantly,

and it's way above what was assumed in the ECB projections in December. And don't you think that these two effects could compensate each other? And the second one is a follow-up on your forward guidance on rates. You've stressed the fundamental importance of the well past. You already said that there are few chances that the interest rates will rise this year.

Don't you think that there is a need for more clarity on this well past? For example, Bundesbank President Weidman said in an interview that expectations for interest rate are in mid 2019 are more or less in line with this forward guidance. Is that a common view in the governing council? Thank you. Well, based on today's data, that's the answer.

So we always think and have our discussions and deliberations based on the data. And to this extent, we are data dependent. And basically that's what the data tell us.

So it's, I'm sorry, your first question was? On oil price, yes, yes, yes, indeed. Indeed, increase in oil prices may be compensated by appreciation in the euro. Although it's not easy to understand exactly the timing of these compensations

because oil prices have gone up, go down, and the time that it takes to pass through is variable. But if you take just the oil price and you translate it in the exchange rate, of course it does compensate that. Which doesn't mean by the way that we, this doesn't imply that we sort of accept

a certain level of exchange rate as a good thing or a bad thing. Just I'm answering to your question in sort of abstract terms, thank you. Thank you very much.