As regards the euro area crisis management instruments, we welcome the decisions of the Heads of State or Government of the euro area to strengthen the EFSF and the ESM in a number of areas. First, there is now greater flexibility in the euro area crisis mechanisms to act as backstops, thanks to the decision to accelerate the entry into force of the European Stability Mechanism, ESM, to July 2012 and for the European Financial Stability Facility, EFSF, to remain active in financing programmes that have started until mid-2013. Second, the clarification that as regards private sector involvement, the euro area will adhere to established IMF practice is also helpful in reassuring investors. Third, the decision to include an emergency procedure into the voting rules of the ESM1 is essential for effective decision making procedure, especially in crisis situations. As regards the EFSF, the Governing Council of the ECB has decided that the ECB will be able to act as agent for the EFSF in its market operations. The ECB – probably supported by a number of National Central Banks – will make its technical infrastructure and know-how available to the EFSF. The technical and legal preparations have started and we hope to complete them in January. III. Credit rating agencies  The activities of credit rating agencies, notably in relation to sovereigns as well as the EFSF, have lately occupied centre stage in the debate in Europe. Calls for better regulation have become louder.
As you know, regarding interest rates, the Governing Council early December decided to lower the key ECB interest rates by 25 basis points, following a 25 basis point decrease on 3 November 2011. As regards the short-term growth outlook for the euro area, the intensified financial market tensions are continuing to dampen economic activity in the euro area and the outlook remains subject to high uncertainty. Euro area economic activity should recover, albeit very gradually, in the course of 2012, as also projected by Eurosystem staff in early December. Substantial downside risks to this economic outlook nevertheless remain. With regard to price developments, inflation was 3.0% in November. Inflation is likely to stay above 2% for several months to come, before declining to below 2%, which view is also broadly confirmed in the December staff projections. Given the environment of weaker growth in the euro area and globally, underlying cost, wage and price pressures in the euro area should also remain modest. Risks to the medium-term outlook for price developments remain broadly balanced. The latest monetary data reflect the heightened uncertainty in financial markets. Looking beyond short-term volatility, the monetary analysis indicates that the underlying pace of monetary expansion remains moderate. The Governing Council of the ECB is determined to ensure that inflation expectations continue to be firmly anchored in line with our aim of keeping inflation rates below, but close to, 2% over the medium term. BIS central bankers’ speeches  1  Let me now turn to the latest non-standard measures.