deployed a number of non - standard tools. increasingly our focus here has shifted towards the financing of small and medium - sized bis central bankers ’ speeches enterprises, which heavily rely on bank financing and in many cases are struggling to retain access to credit. these companies may be small, but when they face a funding problem, it is a big problem for all of us, given that they employ around three - quarters of the euro area ’ s workforce. in june, we decided to launch a series of targeted longer - term refinancing operations – tltros – to ensure that banks have sufficient liquidity to lend to the real economy. the tltros have been designed to encourage banks to increase their lending to the nonfinancial corporate sector. in addition, we have also taken measures to underpin specific market segments that play a key role in the financing of the economy. last week, the governing council decided to start buying high - quality asset - backed securities and covered bonds in october. we will purchase both existing and newly issued abs, which are simple, transparent and real in the sense that the underlying assets consist of loans to the euro area non - financial private sector. let me respond to the concerns recently expressed about the risks posed to the integrity of our balance sheet. it is worth recalling that senior tranches of abs have proven to be highquality assets. according to the association of financial markets in europe, only 0. 12 % of european residential mortgage - backed securities ( rmbs ) outstanding in mid - 2007 have defaulted since then – compared with 22. 05 % for us rmbs. default rates for consumer finance abs and sme collateralised loan obligations have also remained low, well below 1 %, throughout the worst financial and economic crisis we have experienced. as regards covered bonds, credit quality is ensured by a double recourse ( on the underlying assets and on the issuer ), which is in fact comparable with the double protection that exists in our standard repo operations. overall, the decisions announced last week were taken with a view to underpinning the firm anchoring of medium to long - term inflation expectations, in line with our aim of maintaining inflation rates below, but close to, 2 %. we expect the two purchase programmes to effectively complement the tltros in enhancing the functioning of the monetary policy transmission and in providing further monetary accommodation given that we have now reached the lower bound. the newly decided measures, together with the tltros, will

- 4. 5 per cent over the medium - term. for the purpose of monetary policy formulation, the reserve bank has projected the growth rate of money supply ( m3 ) at around 17. 0 - 17. 5 per cent and non - food credit at 24 - 25 per cent for 2007 - 08 in consonance with the outlook on growth and inflation. while retaining the stance of the monetary policy, the reserve bank has flagged the importance of financial stability in the first quarter review of the annual policy statement issued on july 31, 2007. according to the central statistical organisation, during the first quarter of the financial year 2007 - 08 ( april - june, 2007 ), the real gdp grew by 9. 3 per cent on the back of 9. 1 per cent in the last quarter of 2006 - 07 ( january - march, 2007 ) and 9. 6 per cent in the first quarter of the previous year ( april - june, 2006 ). the wholesale price index inflation, on a year - on - year basis, decreased to 3. 3 per cent during the week ended september 29, 2007 from 5. 4 per cent a year ago. the consumer price index inflation ( for industrial workers ) was 7. 3 per cent in august 2007 as against 6. 3 per cent during the same period of the previous year. as on september 28, 2007, the broad money ( m3 ) supply growth was 21. 0 per cent on a year - onyear basis ( 19. 0 per cent last year ). though non - food credit growth was buoyant and broad based, it declined to 22. 1 per cent as on september 28, 2007 from 31. 6 per cent a year ago. while exports continued the momentum, imports rose sharply, leading to widening of trade deficit to us $ 32. 5 billion during april - august 2007 as against us $ 19. 9 billion during the same period last year. currently, the cash reserve ratio, which is the unremunerated reserves kept with the reserve bank, is at 7. 0 per cent, while the repo rate and reverse repo rate are at 7. 75 per cent and 6. 0 per cent, respectively. risks from global developments continue to persist, especially in the form of inflationary pressures, re - pricing of risks by financial markets and the possibility of a downturn in some of the asset classes. excessive leveraging has enhanced the vulnerability of the global financial system. large changes in liquidity conditions are ob