These include the raising of the limit on deposit guarantees, the creation of the Fund for the Acquisition of Financial Assets to purchase high-quality assets from Spanish banks, guarantees for bank bond issues, various special financing facilities instrumented through the ICO (Official Credit Institute), and the introduction of new personal income tax deductions and the launching of the State Fund for Local Investment and of the Special State Fund for revitalising the economy. In Spain, the international crisis has impacted the economy at a particularly delicate time. Already under way was a process of adjustment of the imbalances that had built up over a long growth phase in which Spain had shared some of the above-mentioned factors of fragility of the world economy, though not all of them and not to the same degree of intensity. Certain components were undoubtedly particular to Spain. Starting with the shared elements, the expansion of Spanish household and corporate spending was based excessively on debt. True, the private sector was starting from relatively low debt levels. Admittedly, too, euro area membership provided a particularly valuable framework of stability and broadened financing possibilities. No less true, however, was the fact that the single monetary policy stance proved overly lax during all these years for Spanish domestic conditions and that fiscal policy, even though substantial budgetary consolidation was undertaken, was not enough to offset the excessive monetary looseness. A greater containment of current spending in the upturn would have helped curb the imbalances and would have strengthened the underlying budgetary position.

On the basis of current information and prevailing futures prices for oil, annual HICP inflation is expected to remain very low or negative in the months ahead. Supported by the favourable impact of our recent monetary policy measures on aggregate demand, the impact of the lower euro exchange rate and the assumption of somewhat higher oil prices in the years ahead, inflation rates are expected to start increasing gradually later in 2015. This assessment is also broadly reflected in the March 2015 ECB staff macroeconomic projections for the euro area, which foresee annual HICP inflation at 0.0% in 2015, 1.5% in 2016 and 1.8% in 2017. In comparison with the December 2014 Eurosystem staff macroeconomic projections, the inflation projection for 2015 has been revised downwards, mainly reflecting the fall in oil prices. In contrast, the inflation projection for 2016 has been revised slightly upwards, also reflecting the expected impact of our recent monetary policy measures. The Governing Council will continue to closely monitor the risks to the outlook for price developments over the medium term. In this context, we will focus in particular on the passthrough of our monetary policy measures, geopolitical developments, and exchange rate and energy price developments. When discussing the economic outlook and the new projections, the Governing Council acknowledged that the staff projections are conditional on the full implementation of all our policy measures. Moreover, the March staff projections extend the horizon to 2017.