Mr Duisenberg reports on the outcome of the latest meeting of the ECB Governing Council  Introductory statement given by Mr Willem Duisenberg, President of the European Central Bank, to the Press Conference, Frankfurt, on 9 September 1999. *  *  *  Ladies and gentlemen, The Vice-President and I are here today to report on the outcome of today’s meetings of the General Council and the Governing Council of the ECB, which were attended by Mr de Silguy, European Commissioner. The Governing Council reviewed the outlook for price developments and the risks to price stability in the euro area, in line with its monetary policy strategy. As a result, the Governing Council decided not to change the prevailing ECB interest rates. The interest rate on the main refinancing operations of the Eurosystem will thus remain 2.5%. In addition, the interest rate on the marginal lending facility will continue to be 3.5% and that on the deposit facility has been kept at 1.5%. Let me give you some details about our review of the latest information on monetary, financial and other economic developments, as well as about our latest assessment of the monetary policy stance and thereby explain the decisions taken today. With regard to monetary developments in the euro area, the 12-month growth rate of the broad monetary aggregate M3 increased from 5.3% in June to 5.6% in July 1999.
The latest three-month average of M3 growth, covering the period from May to July 1999, rose to 5.4%, compared with 5.3% in the previous three-month period from April to June 1999. Overall, the annual rate of growth of M3 has been moving away from the reference value of 4.5% since the start of the year. This upward movement may be explained to a large extent by the very low opportunity costs of holding monetary assets, especially the most liquid components, but perhaps also by the gradually improving economic conditions in the euro area. At the same time, the annual growth rate of credit to the private sector remained high, even though it declined by 0.5 percentage point in July, to 10.4%. The monetary policy strategy of the Eurosystem assigns a prominent role to the behaviour of M3. Accordingly, recent monetary developments merit close attention. At the same time, taking into account the fact that we are still in a very early phase of Monetary Union and that figures for broad money growth have been subject to some revisions in recent months, shorter-term monetary developments need to be interpreted with caution. Concerning financial market indicators, the upturn in long-term interest rates in the euro area, seen since early May, continued in August and early September. Domestic factors seem to have played a dominant role, as indicated by the fact that differentials between US and euro area bond yields have narrowed further.