is transmitted to all parts of the economy and to all jurisdictions in the pursuit of our price stability mandate. the governing council, therefore, continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry. let me now explain our assessment in greater detail, starting with the economic analysis. the latest economic indicators and survey results confirm a sharp contraction of the euro area economy and rapidly deteriorating labour market conditions. the coronavirus pandemic and the necessary containment measures have severely affected both the manufacturing and services sectors, taking a toll on the productive capacity of the euro area economy and on domestic demand. in the first quarter of 2020, when containment measures were only in place from midmarch in most countries, euro area real gdp decreased by 3. 8 %, quarter on quarter. information from surveys, high - frequency indicators and incoming hard data all point to a further significant contraction of real gdp in the second quarter. most recent indicators suggest some bottomingout of the downturn in may as parts of the economy gradually reopen. accordingly, euro area activity is expected to rebound in the third quarter as the containment measures are eased further, supported by favourable financing conditions, an expansionary fiscal stance and a resumption in global activity, although the overall speed and scale of the rebound remains highly uncertain. this assessment is also broadly reflected in the june 2020 eurosystem staff macroeconomic projections for the euro area. in the baseline scenario of the projections, annual real gdp is expected to fall by 8. 7 % in 2020 and to rebound by 5. 2 % in 2021 and by 3. 3 % in 2022. compared with the march 2020 ecb staff macroeconomic projections, the outlook for real gdp growth has been revised substantially downwards by 9. 5 percentage points in 2020 and revised upwards by 3. 9 percentage points in 2021 and 1. 9 percentage points in 2022. given the exceptional uncertainty currently surrounding the outlook, the projections also include two alternative scenarios, which we will publish on our website following this press conference. in general, the extent of the contraction and the recovery will depend crucially on the duration and the effectiveness of the containment measures, the success of policies to mitigate the adverse impact on incomes and employment, and the extent to which supply capacity and domestic demand are permanently affected. overall, the governing council sees the balance of risks around the baseline projection to the downside. according

lead to further reflection on some of these established principles, the ecb has made a public commitment to respect these red lines, and for good reasons. importantly, pepp purchases are separate from and cannot be consolidated with app purchases. this means that the pepp remains a distinct monetary policy measure in comparison to the app. in keeping with these safeguards the app will also not inherit the features of the pepp. the flexibility embedded in the pepp cannot be unconstrained, and we must ensure that the ecb continues to operate within the limits of its competence. collateral easing must be strictly temporary and not come at the expense of fragmentation another aspect of our response to the crisis was the unprecedented set of temporary collateral easing measures that we announced in april 2020. these measures continue to support our liquidity operations and ensure continued collateral availability. for example, we decided to extend national additional credit claim ( acc ) frameworks to include loans benefiting from public guarantee schemes related to the covid - 19 crisis even if they lead to increased fragmentation temporarily. we also took the decision to maintain the eligibility of issuers and marketable assets in the event of a deterioration in credit ratings during the crisis. the legality of these measures is ensured through compliance with all the generally applicable principles i mentioned earlier. more specifically, their legality is safeguarded by virtue of the risk management measures with which they are associated, to ensure that the eurosystem would not suffer losses if the collateral were realised. in this way, the accs which are not loss sharing like the standard monetary policy instruments, can be classified as “ adequate collateral ” in accordance with article 18. 1 of the statute of the escb. even though the tools we use are not new and had been deployed previously, we adapted them further during the current crisis. at the same time, our actions complemented other european or national policies, such as the provision of public sector guarantees on the fiscal side. taken together, these measures have reinforced the effectiveness of liquidity support offered to the real economy. we should ensure, however, that the collateral easing measures do not inadvertently lead to further fragmentation and the re - introduction of a tier - 2 collateral framework. more importantly, they should respect the level playing field throughout the euro area. it is true that the expansion of the acc frameworks can increase the overall complexity and opaqueness of the acc collateral landscape. the country - specific legal and institutional features of these frameworks could give rise to additional legal