for these pressures to spill over into the euro area real economy. downside risks also relate to further increases in energy prices, protectionist pressures and the possibility of a disorderly correction of global imbalances. with regard to price developments, euro area annual hicp inflation was 2. 5 % in july 2011, following 2. 7 % in june. the relatively high inflation rates seen over the past few months largely reflect higher energy and other commodity prices. looking ahead, inflation rates are likely to stay clearly above 2 % over the coming months. upward pressure on inflation, mainly from energy and other commodity prices, is also still discernible in the earlier stages of the production process. it remains of paramount importance that the rise in hicp inflation does not translate into second - round effects in price and wage - setting behaviour and lead to broad - based inflationary pressures. inflation expectations must remain firmly anchored in line with the governing council ’ s aim of maintaining inflation rates below, but close to, 2 % over the medium term. risks to the medium - term outlook for price developments remain on the upside. they relate, in particular, to higher than assumed increases in energy prices. furthermore, there is a risk of increases in indirect taxes and administered prices that may be greater than currently assumed, owing to the need for fiscal consolidation in the coming years. finally, upside risks may stem from stronger than expected domestic price pressures in the euro area. turning to the monetary analysis, the annual growth rate of m3 decreased to 2. 1 % in june 2011, from 2. 5 % in may. looking through the recent monthly volatility, m3 growth has broadly stabilised over recent months, after edging up until the first quarter of 2011. the annual growth rate of loans to the private sector declined to 2. 5 % in june, from 2. 7 % in may. overall, the underlying pace of monetary expansion remains moderate. at the same time, monetary liquidity accumulated prior to the period of financial market tensions continues to be ample, and may facilitate the accommodation of price pressures in the euro area. looking at m3 components, the annual growth rate of m1 remained unchanged at 1. 2 %, whereas growth in other short - term deposits declined to 3. 7 %. the growth differentials continue to reflect in part the gradual increase in the remuneration of short - term time and savings deposits over recent months. at the same time, the still relatively steep yield curve implies a dampening impact

jean - claude trichet : ecb press conference – introductory statement introductory statement by mr jean - claude trichet, president of the european central bank and mr vitor constancio, vice - president of the european central bank, frankfurt am main, 4 august 2011. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. we will report on the outcome of today ’ s meeting of the governing council, which was also attended by commissioner rehn. based on its regular economic and monetary analyses, the governing council decided to keep the key ecb interest rates unchanged, following the 25 basis point increase on 7 july 2011. the information that has become available since then confirms our assessment that an adjustment of the accommodative monetary policy stance was warranted in the light of upside risks to price stability. while the monetary analysis indicates that the underlying pace of monetary expansion is still moderate, monetary liquidity remains ample and may facilitate the accommodation of price pressures. as expected, recent economic data indicate a deceleration in the pace of economic growth in the past few months, following the strong growth rate in the first quarter. continued moderate expansion is expected in the period ahead. however, uncertainty is particularly high. for monetary policy, it is essential that recent price developments do not give rise to broad - based inflationary pressures. inflation expectations in the euro area must remain firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 % over the medium term. such anchoring is a prerequisite for monetary policy to make an ongoing contribution towards supporting economic growth and job creation in the euro area. at the same time, short - term interest rates remain low and financing conditions are favourable. thus, our monetary policy stance remains accommodative. we will continue to monitor very closely all developments with respect to upside risks to price stability. given the renewed tensions in some financial markets in the euro area, the governing council today also decided to conduct a liquidity - providing supplementary longer - term refinancing operation ( ltro ) with a maturity of approximately six months. the operation will be conducted as a fixed rate tender procedure with full allotment. the rate in this operation will be fixed at the average rate of the main refinancing operations ( mros ) over the life of the supplementary ltro. the operation will be announced on 9 august 2011, with allotment on 10 august