The Treaty authorises the Council to conclude formal agreements on an exchange rate system for the euro and to formulate general orientations for exchange rate policy – after consulting the ECB in order to ensure that any decision is consistent with monetary policy’s overriding objective of price stability. Thus far, and with good reason, neither of these procedures has been implemented.
However, given that growth is projected to be not much above the rate needed to absorb new entrants to the labor force, the reduction in the unemployment rate seems likely to be frustratingly slow. Indeed, the central tendency of participants’ forecasts now has the unemployment rate at 7 percent or higher at the end of 2014.