As you know, the Governing Council of the ECB raised the rate of its main refinancing operation, and that of the deposit facility and the marginal lending facility by 0.5 percentage points to 4.25%, 3.25% and 5.25% respectively on 8 June. This decision was based on the conclusion that both pillars of the monetary policy strategy pointed to upward risks to price stability in the euro area in the medium term. Let me elaborate on this. With regard to monetary developments, M3 growth has deviated from its reference value since the beginning of 1999. This deviation has increased further since the beginning of 2000. Thus, the three-month average of the annual growth rates of M3, covering the period from February to April 2000, increased from 5.9% in the preceding three-month period, to 6.3%. As a consequence, the deviation of M3 growth from the reference value of 4½% rose to almost 2 percentage points. The assessment of there being ample liquidity in the euro area was further supported by the continuing rapid expansion of lending to the private sector. The annual growth rate of lending to the private sector stood at a very high level throughout 1999 and in the first few months of 2000. Important determinants underlying this development are strong economic activity in the euro area and very favourable industrial and consumer confidence.
Macro Week 2023, Peterson Institute for International Economics – Washington, 12 April 2023 How central banks should face instability and fragmentation Speech by François Villeroy de Galhau, Governor of the Banque de France  Press contact: Mark Deen (mark.deen@banque-france.fr), Déborah Guedj (deborah.guedj@banquefrance.fr)  Page 1 sur 7 Ladies and Gentlemen, I am delighted to be here in person at the Peterson Institute for International Economics. I would like to warmly thank Adam Posen for the invitation to speak at this edition of Macro Week. Two years ago, I had the opportunity to discuss (online) “how to revisit central banking and financial stability”. Some of my remarks will no doubt echo these thoughts, however in a quite different context: shifting geopolitics, reignited inflation and some turmoil in the banking sector have since entered the arena. Today, I would like to provide a European perspective on both risks of instability and fragmentation, starting first with the conduct of monetary policy in this unstable economic landscape (I), before turning to the roads forward on a fragmented international stage (II). I. Monetary policy facing the risk of price and financial instability A. The ECB shows resolve in bringing inflation back to target Against the backdrop of the invasion of Ukraine, inflation in Europe accelerated sharply last year due to soaring energy and commodity prices. There has partly been a symmetric phenomenon: easing energy prices have led to a decline in headline inflation over the last few months, from a peak of 10.6% in October to 6.9% in March.