, thereby underpinning economic activity and safeguarding medium - term price stability. against this background, the governing council decided the following : first, we will continue to conduct net asset purchases under the pandemic emergency purchase programme ( pepp ) with a total envelope of €1, 850 billion until at least the end of march 2022 and, in any case, until the governing council judges that the coronavirus crisis phase is over. based on a joint assessment of financing conditions and the inflation outlook, the governing council expects purchases under the pepp over the next quarter to be conducted at a significantly higher pace than during the first months of this year. we will purchase flexibly according to market conditions and with a view to preventing a tightening of financing conditions that is inconsistent with countering the downward impact of the pandemic on the projected path of inflation. in addition, the flexibility of purchases over time, across asset classes and among jurisdictions will continue to support the smooth transmission of monetary policy. if favourable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase horizon of the pepp, the envelope need not be used in full. equally, the envelope can be recalibrated if required to maintain 1 / 4 bis central bankers'speeches favourable financing conditions to help counter the negative pandemic shock to the path of inflation. we will continue to reinvest the principal payments from maturing securities purchased under the pepp until at least the end of 2023. in any case, the future roll - off of the pepp portfolio will be managed to avoid interference with the appropriate monetary policy stance. second, net purchases under our asset purchase programme ( app ) will continue at a monthly pace of €20 billion. we continue to expect monthly net asset purchases under the app to run for as long as necessary to reinforce the accommodative impact of our policy rates, and to end shortly before we start raising the key ecb interest rates. we also intend to continue reinvesting, in full, the principal payments from maturing securities purchased under the app for an extended period of time past the date when we start raising the key ecb interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. third, the governing council decided to keep the key ecb interest rates unchanged. we expect them to remain at their present or lower levels until we have seen the inflation outlook

robustly converge to a level sufficiently close to, but below, 2 per cent within our projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics. finally, we will continue to provide ample liquidity through our refinancing operations. in particular, our third series of targeted longer - term refinancing operations ( tltro iii ) remains an attractive source of funding for banks, supporting bank lending to firms and households. preserving favourable financing conditions over the pandemic period for all sectors of the economy remains essential to underpin economic activity and safeguard medium - term price stability. we will also continue to monitor developments in the exchange rate with regard to their possible implications for the medium - term inflation outlook. we stand ready to adjust all of our instruments, as appropriate, to ensure that inflation moves towards our aim in a sustained manner, in line with our commitment to symmetry. let me now explain our assessment in greater detail, starting with the economic analysis. following the strong rebound in growth in the third quarter of 2020, euro area real gdp declined by 0. 7 per cent in the fourth quarter. looking at the full year, real gdp is estimated to have contracted by 6. 6 per cent in 2020, with the level of economic activity for the fourth quarter of the year standing 4. 9 per cent below its pre - pandemic level at the end of 2019. incoming economic data, surveys and high - frequency indicators point to continued economic weakness in the first quarter of 2021 driven by the persistence of the pandemic and the associated containment measures. as a result, real gdp is likely to contract again in the first quarter of the year. economic developments continue to be uneven across countries and sectors, with the services sector being more adversely affected by the restrictions on social interaction and mobility than the industrial sector, which is recovering more quickly. although fiscal policy measures are supporting households and firms, consumers remain cautious in the light of the pandemic and its impact on employment and earnings. moreover, weaker corporate balance sheets and elevated uncertainty about the economic outlook are still weighing on business investment. looking ahead, the ongoing vaccination campaigns, together with the gradual relaxation of containment measures – barring any further adverse developments related to the pandemic – underpin the expectation of a firm rebound in economic activity in the course of 2021. over the medium term, the recovery of the euro area economy should be supported by favourable financing conditions, an expansionary fiscal stance and a recovery