substantially, to an annual growth rate of 1. 1 %. the effect of the adverse factors weighing on growth is expected to unwind over time. growth is expected to come in at 1. 5 % in 2021, unchanged from previous projections. supportive financing conditions, further employment gains and rising wage growth, and the ongoing – albeit slower – expansion in global activity, will continue to underpin the euro area expansion. nevertheless, the weaker growth momentum will leave its mark on domestic price pressures, slowing the adjustment of inflation towards our aim. underlying inflation continues to be muted and our staff projections see a somewhat slower path for headline inflation, which is now foreseen to reach 1. 6 % at the end of 2021. significant monetary policy accommodation therefore remains essential. at our march meeting, we decided to adjust the date - based leg of our forward guidance. by confirming that rates would remain at their current levels at least through the end of 2019, we extended the period of very low interest rates further by minimising expectations of a rate hike before the end of this year. of course, the second, state - based leg of our forward guidance continues to provide additional accommodation. furthermore, we observed that while bank lending conditions remain very favourable, the weaker outlook could affect the terms and conditions under which banks extend credit to businesses and households. it was therefore essential to preserve bank lending conditions by making sure that the refinancing needs of banks stemming from maturing bank bonds and outstanding targeted longer - term refinancing operations ( tltros ) would not jeopardise the transmission of monetary policy. 2 / 4 bis central bankers'speeches we therefore launched tltro - iii, a new series of quarterly refinancing operations, starting in september 2019 and ending in march 2021, each with a maturity of two years. banks will be entitled to borrow up to 30 % of the stock of eligible loans at a rate indexed to the interest rate on the main refinancing operations over the life of each operation. like the current tltro programme, tltro - iii will feature built - in incentives for credit conditions to remain favourable for the euro area economy. overall, the measures taken in march signal our determination to provide the accommodation needed to underpin the economic expansion and ensure that inflation remains on a sustained path towards our inflation aim. key issues on the european financial agenda over the course of 2018, the financial stability environment became more challenging, which was reflected in systemic stress

supported domestic demand, the growth momentum moderated in 2018. for the year as a whole, gdp rose by 1. 8 %, compared with 2. 4 % in 2017. this was mainly due to weaker global trade, as well as some temporary factors at both the domestic and global levels. one such factor was the transition to new car emissions standards, which caused some bottlenecks in the european car production sector. measures of underlying inflation remained generally muted throughout 2018, but there was no risk of deflation, and inflation was projected to be on a gradual upward path. the underlying 1 / 4 bis central bankers'speeches strength of the domestic economy, underpinned by our accommodative monetary policy, and tighter labour markets, which were pushing up wages, supported our confidence that inflation was indeed on its way to converge to levels below, but close to, 2 % over the medium term. against this background, we decided to end net asset purchases by december 2018. at the same time, we moved back to using our policy interest rates and the forward guidance on their likely future path as the principal tool for preserving the ample degree of policy accommodation that was still needed. as a result, we enhanced our forward guidance on policy rates, adding an explicit date - based component to the state - contingent component. this anchors interest rate expectations more firmly. in particular, the combination of the two components reflected our commitment to provide the accommodation needed to deliver on our mandate of price stability. our forward guidance on the key ecb interest rates has been reinforced by our ongoing reinvestments of the sizeable stock of acquired assets. these reinvestments will maintain the size of our securities portfolio and, together with the forward guidance on the reinvestment horizon, continue to support favourable financing conditions. the ecb ’ s recent monetary policy decisions in the second half of 2018, the pace of the euro area economic expansion started to moderate more strongly than expected. incoming information continued to disappoint in early 2019, suggesting that the moderation would extend into the current year. the impact of the temporary domestic factors dampening growth has turned out to be longerlasting than anticipated, and the global economy has become less supportive. the persistence of uncertainties related, in particular, to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets has appeared to dent economic sentiment. in our latest staff projections, the euro area growth outlook for 2019 has been revised down