turning point was reached earlier in 2010. this would be consistent with the lagged response of loan developments to economic activity over the business cycle that was also observed in past cycles. the annual growth rate of loans to households stood at 2. 8 % in september and thereby remained at levels seen in previous months. banks have continued to gradually increase the weight of credit to the private sector in the overall size of their balance sheets, but the challenge remains to expand the availability of such credit when demand picks up further. where necessary, to address this challenge, banks should retain earnings, turn to the market to strengthen further their capital bases or take full advantage of government support measures for recapitalisation. to sum up, the current key ecb interest rates remain appropriate. we therefore decided to leave them unchanged. taking into account all the new information and analyses which have become available since our meeting on 7 october 2010, we continue to expect price developments to remain moderate over the policy - relevant medium - term horizon. recent economic data are consistent with our assessment that the underlying momentum of the recovery remains positive. at the same time, uncertainty is prevailing. a cross - check of the outcome of our economic analysis with that of the monetary analysis confirms that inflationary pressures over the medium term remain contained. we expect price stability to be maintained over the medium term, thereby supporting the purchasing power of euro area households. inflation expectations remain firmly anchored in line with our aim of keeping inflation rates below, but close to, 2 % over the medium term. the firm anchoring of inflation expectations remains of the essence. turning to fiscal policies, there is a clear need to strengthen public confidence in the capacity of governments to return to sustainable public finances, reduce risk premia in interest rates and thus support sustainable growth over the medium term. to this end, it is essential that countries pursue credible multi - year consolidation plans and fully implement the planned consolidation measures. in their 2011 budgets, they need to specify credible fiscal adjustment measures, focusing on the expenditure side. any positive fiscal developments that may emerge, reflecting factors such as a more favourable than expected environment, should be exploited to make faster progress with fiscal consolidation. the urgent implementation of far - reaching structural reforms is essential to enhance the prospects for higher sustainable growth. major reforms are particularly necessary in those countries that have experienced a loss of competitiveness in the past or that are suffering from high fiscal and external deficits. the removal of labour market rigidities and the strengthening of productivity growth would further

for release on delivery 12 : 50 p. m. edt september 27, 2021 navigating delta headwinds on the path to a full recovery remarks by lael brainard member board of governors of the federal reserve system at “ shocks, shifts, and the emerging economic landscape ” 2021 annual meeting of the national association for business economics arlington, virginia september 27, 2021 it is a great honor to join the community of nabe fellows, and i want to express my appreciation to the board of directors of nabe. 1 given the unprecedented nature of the pandemic shock, it should be no surprise that the recovery is not proceeding in a straight line. the economy continues to make welcome progress, but the delta variant has been more disruptive than initially expected. the headwinds from delta are a reminder that the virus continues to pose downside risks to the outlook. delta highlights the importance of being attentive to economic outcomes and not getting too attached to an outlook that may get buffeted by evolving virus conditions. indeed, delta disrupted both demand and supply. many forecasters have downgraded consumer spending in the second half of the year, as delta has limited the acceleration in services spending that had been anticipated to help offset the drag on activity from fiscal support shifting from being a tailwind to a headwind. although the retail sales print for august was stronger than expected, the level of spending in august was not much changed from june. high - frequency data indicate that consumption of discretionary services, such as restaurants and travel, stalled or may have even moved lower in some categories since july. this development doesn ’ t appear to be sensitive to regional variations in vaccinations, perhaps reflecting the high transmissibility of delta. for example, the consumption of food services has declined recently even in states with relatively high vaccination rates and low case counts. 2 i am grateful to kurt lewis of the federal reserve board for his assistance in preparing this text. these views are my own and do not necessarily reflect those of the federal reserve board or the federal open market committee. reflecting these trends, consumer confidence declined in the michigan and conference board surveys in august. for more information on the university of michigan survey of consumers, see https : / / data. sca. isr. umich. edu / survey - info. php. for more information on the conference board consumer confidence survey, see https : / / conference - board. org / data / consumerconfide