lower foreign and domestic demand. overall, the staff projections are in line with our assessment of subdued underlying price and cost pressures that suggest a period of prolonged low inflation. indeed, pipeline price pressure pressures appear low with producer prices having declined for a while, recently declining even further to – 1. 4 % in october from – 0. 9 % in september. also labour cost pressures are very much contained, particularly in the presence of moderate wage growth, high unemployment and ample spare capacity. external price pressures eased during the first three quarters of 2013, i. a. owing to sluggish global demand and declines in oil and non - oil commodity prices. the import deflator is thus estimated to have declined in year - on - year terms over this period. while it will continue to fall in the following quarters as a result of these factors, the import deflator is expected to increase slightly from mid - 2014 onwards, as the downward impact of the previous appreciation of the euro fades away, as non - energy commodity prices increase and as import demand gains momentum, allowing for stronger mark - ups. on that basis, also our recent assessment from the december governing council meeting is fully consistent with what we have been saying now for some time : inflation is low and we do not expect this to change for some time. signals from the monetary pillar let me now turn to the signals we have received from the monetary pillar. in a nutshell, these signals confirm the subdued medium - term inflation outlook deriving from the economic analysis. while monetary dynamics have been weak, essentially since the onset of the crisis, growth in broad money moderated further in recent months. the annual growth rate of the broad monetary aggregate m3 decreased to 1. 4 % in october 2013 ( or 1. 7 % adjusting for one - off effects ), which is the latest available data point, from 2. 0 % in september 2013. this marks a continuation in the deceleration from previous months. after m3 still grew at 2. 8 % in the second quarter of 2013, the third quarter recorded a significant drop in this growth rate to 2. 2 %. a key driver of these recent developments in m3 is that, in the current environment, monetary assets only yield little remuneration. as a consequence, money holders are incentivised to engage in two types of substitution : either they hold very liquid instruments, such as overnight deposits. this shows up in still robust growth in the narrow monetary aggregate m1, which stood

lending rates. we see muted investment, despite firms building up cash reserves. this cannot be solved by further accommodation, but is a clear cut case for the right structural policies. in fact, with structural economic policies directed towards more competitiveness, sustainable fiscal budgets and financial sector policies and governance that set the stage for sound banks ’ balance sheet and more stable financial market conditions, economic confidence and confidence in the euro area as an economic and financial centre will return and unleash the willingness for more credit provision, more investment and domestic demand. conclusion with this, let me conclude. the euro area economy continues to recover, albeit at a slow and uneven pace. reflecting the weak economic and monetary dynamics, underlying price pressures in the euro area are expected to remain subdued over the medium term. the ecb ’ s monetary policy has successfully contributed to this outlook. our stance is accommodative in full consistency with our prime task to maintain price stability in the euro area. this is vindicated by the consistent anchoring of inflation expectations for the euro area over the medium to long term in line with our aim of maintaining inflation rates below, but close to, 2 %. yet, there is no doubt that the outlook on inflation remains subdued and we expect only a very gradual upward movement towards inflation rates below, but close to, 2 % later on. that ’ s why our monetary policy will continue to provide an appropriate degree of accommodation. and just be reminded that our forward guidance to keep interest rates at present or lower levels for an extended period of time remains in place. let me also assure you that the ecb has and always will respond to downside risks to price stability if they were to emerge going forward. here our policy rate margin still leaves some room for manoeuvre and our operational framework provides the necessary tools to react swiftly if warranted. bis central bankers ’ speeches but let ’ s be clear : by ensuring price stability, the ecb is making its contribution to the economic recovery. yet, a durable return to robust and sustainable growth requires that governments persevere in their fiscal and structural reform agenda. bis central bankers ’ speeches