This will not only facilitate the task of monetary policy, but will contribute to the continued reduction of unemployment in the euro area. It is the best recipe for sustainable robust growth. In addition, long-term growth perspectives for the euro area will be strengthened if Member States intensify fiscal consolidation. All in all, looking ahead, GDP for the euro area is expected to grow approximately close to trend potential growth. In a context of moderate but still substantial economic growth and of inflationary pressures, which are expected to weaken over the medium run, the Governing Council of the ECB decided on its Thursday 10 May’s meeting to adjust the key ECB rates by 25 basis points. More precisely, as our President Wim Duisenberg explained on behalf of the Governing Council, the decision was grounded on the following key monetary, financial and economical developments: On the monetary side, which constitutes as you may know the first pillar of the ECB monetary policy strategy, M3 growth no longer poses a risk to price stability. Such a statement results from the following considerations:  BIS Review 49/2001  1  -  M3 growth has been on a gradual downward trend since the beginning of last year, reflecting the tightening of the ECB monetary policy, which started in November 1999.
The Rehnberg Agreements of 1991–1992 resulted in significantly lower agreed wages than previously and – more importantly – they removed the price and wage clauses from the agreements, thus contributing to breaking the price and wage spiral. The Industrial Agreement of 1997 was another important change. The wage bargaining rounds of 1995 had resulted in relatively high wage increases of over 5 per cent per year for the following two years. This resulted in pressure from the government of the time on social partners to change wage formation through negotiation. The Industrial Agreement was exactly this kind of change. It assumes that the manufacturing sector, exposed as it is to international competition, should determine the level of wage increases. The Agreement also means that there are rules for the conducting of negotiations, for example that demands should be specified well ahead of the expiry of agreements and that the conclusion of negotiations should be supported by mediators, the so-called impartial chairman. There are also similar, but not as far-reaching, agreements in other sectors. The National Mediation Office, which was set up in 2000, was another important change. As is widely known, the Office’s tasks are to mediate in labour disputes and to actively promote efficient wage formation. The active promotion of efficient wage formation entails, among other tasks, ensuring that wage formation permits the strong growth of employment.