The housing market and its effects on spending will be among the areas that Tom and I and our colleagues on the FOMC will be monitoring most closely as we try to discern the emerging pattern of economic activity and inflation.
As a result, all euro area countries should achieve their medium-term objective of sound budgetary positions as soon as possible and by 2010 at the latest. Moreover, all countries should avoid fiscal policies that feed macroeconomic imbalances. This would allow euro area countries to prepare themselves for less favourable economic conditions.