Transcript of the introductory statement from the press conference - 26 September 2013

GOVERNOR

As you already know, we decided unanimously to leave the two-week repo rate at technical zero. As regards interventions, we voted again. We didn’t launch interventions, but we agreed that their probability is basically unchanged – as we identified the developments to be broadly in line with the previous forecast discussed at the previous meeting – and remains high.

Consistent with the forecast is a decline in market interest rates to zero, followed by a noticeable rise in rates only in 2015. The forecast points to a need to ease monetary policy using other instruments. No risks of an increase in inflation pressures are identified. As regards the risks, we regard them as being slightly – really very slightly – on the downside. What was much more important was that we agreed that the conditions are simply developing in line with the forecast.

Here is the current forecast versus inflation. Inflation is below the forecast, but of course other indicators that are slightly more positive than expected by the forecast offset this.

Turning to the external environment, it is hard to identify any truly important deviation in consumer prices, and basically the same holds true for producer prices. GDP growth is in line with what we expected. As for the three-month EURIBOR, the increase was later offset somewhat, as Consensus Forecasts captures it at a time when we were all still hearing the Fed’s communications on tapering. In the meantime, of course, the tapering was postponed, so from this perspective this is not a change that has any dramatic effect on our decisions at the moment.

In the external environment there is also a slight – very slight – increase in expected oil prices and basically no major change in the euro-dollar exchange rate in the future.

As for the domestic economy, we are beginning to see quarterly growth, broadly as expected in the forecast. By contrast, GDP is still falling in year-on-year terms, the labour market is in stagnation, and inflation pressures are virtually invisible or imperceptible. By contrast, the outlook for administered prices is in fact shifting downwards.

Looking at recent developments as compared to the forecast, we can see that the forecast was slightly more sceptical as regards GDP in Q2. On the other hand, there is a slight problem with analysing the data in more detail, as we will get a better analysis only in the days ahead. There are relatively significant one-off effects. However, what is probably much more important is that the deviation is basically marginal. For inflation, the situation is in a way very similar, but in the opposite direction. It is worth saying that those few tenths of a percentage point are of course more important for inflation – where the deviations are usually smaller – than for GDP, which is much less accurate. The other data – I think it was mentioned that one indicator is deviating upwards and the other downwards, so it is hard to draw any strong conclusions from this.

As I said, the risks to the forecast are perhaps tilted towards a need for slightly easier monetary conditions. There is slightly lower domestic inflation and considerably lower domestic monetary policy-relevant inflation and administered price outlook, as well as lower wage growth. On the other hand, the first signs of a recovery are appearing. So, overall we basically said that the developments were in line with the forecast, which is the principal message. And the secondary message is that if we summed up the pluses and minuses, we would obtain a very small, negligible minus in the direction of easier monetary conditions.